The deal amounts to nearly $2 billion more than an offer Cisco made to the chipmaker in 2019.

This week, Cisco announced an amendment to the definitive merger agreement under which they had previously agreed to acquire Acacia. Under the terms of the amended agreement, Cisco would acquire Acacia for $115 per share in cash, or for approximately $4.5 billion on a fully diluted basis, net of cash and marketable securities.

Cisco and Acacia expect to complete the acquisition by the end of the first calendar quarter of 2021, subject to closing conditions, including Acacia stockholder approval.

Upon completion of the acquisition, CEO Raj Shanmugaraj and Acacia employees will join Cisco’s Optics business.

Smoothing the troubled waters

The deal did not always look so concrete. Last week, Acacia issued a public statement saying that it “did not have an obligation to close” the original purchase deal with Cisco. This was because Cisco didn’t secure all the required Chinese regulatory approvals in the allotted time frame. Cisco argued that it did in fact meet all the conditions necessary to complete the acquisition. They even filed a lawsuit to block Acacia from terminating the deal.

The new, amended $4.5 billion agreement signals the end of that legal imbroglio. A spokesperson has now said that Cisco has agreed to drop their lawsuit immediately.

Building up Cisco’s optics business

The acquisition of Acacia reinforces Cisco’s commitment to optics, according to Cisco. They see this as a critical building block that will enhance the company’s ‘Internet for the Future’ strategy.

Acacia makes specialized chips that power fiber optic networks. Its chief area of specialisation is digital signal processors. These manipulate the properties of the light beams used to transmit data over optical networks/ They can increase the distance over which packets can be sent and the amount of information that can be sent at once.

Acacia is also a supplier of silicon photonics chips that turn electrical data into light and vice versa.

Cisco promised to support Acacia’s existing and new customers around the world with industry-leading coherent optics, digital signal processing / photonic integrated circuit modules and transceivers for use in networking products and data centers.