Acacia terminated their agreement after failing to receive timely regulatory approval in China.
Cisco today asked a Delaware court to stop Acacia from terminating an acquisition agreement the companies had signed in 2019.
That year Cisco agreed to buy publicly traded Acacia for approximately $2.6 billion. Now Acacia is calling off the deal. The networking chipmaker is backing out because the companies failed to secure regulatory approval in China within the agreed timeframe.
Acacia publicly declares their intentions
In a press release this week, Acacia explained their actions. “The proposed merger, announced in July 2019, was conditioned on the satisfaction or waiver of customary closing conditions,” they claim.
These conditions included obtaining necessary regulatory approvals. Moreover, the approvals needed to be obtained within the timeframe contemplated by the merger agreement.
This did not happen, according to Acacia.
“As such, Acacia exercised its right to terminate the proposed transaction in accordance with the terms of the merger agreement.”
Cisco fights back
Cisco is disputing Acacia’s claim. The company is petitioning the Delaware Court of Chancery to prevent Acacia from scrapping the acquisition. Cisco has also asked for a freeze on Acacia’s move to exit the deal. They are pushing to allow time for the two companies to resolve the matter.
Cisco explained their motives in an official statement of their own. They explain that Cisco “is seeking confirmation from the Delaware Court of Chancery that it has met all conditions for closing of its acquisition of Acacia Communications.”
This includes approval of China’s State Administration for Market Regulation (SAMR), they claim.
Cisco goes on to say that they have indeed received the regulatory approval from China that is forming the crux of the dispute.
“On January 7, 2021, Cisco was notified by SAMR that the agency has determined that Cisco’s submission is ‘sufficient to address the relevant competition concerns.'”