Cisco Systems Inc. today asked a Delaware court to stop Acacia Communications Inc., a maker of networking chips, from terminating an acquisition agreement the companies had signed in 2019.

Cisco that year inked a deal to acquire publicly traded Acacia for about $2.6 billion. Today, Acacia said that it’s calling off the deal because the companies didn’t secure regulatory approval in China within the timeframe specified by the acquisition agreement.

“Because approval of the Chinese government’s State Administration for Market Regulation was not received within the timeframe contemplated by the merger agreement, Acacia did not have an obligation to close the merger before the arrival of the January 8, 2021 extended end date,” the company stated in a release.

Cisco is disputing Acacia’s claim. The company is petitioning the Delaware Court of Chancery to prevent Acacia from scrapping the acquisition and has asked for a freeze on the chipmaker’s move to exit the deal until the matter is resolved. 

Cisco “is seeking confirmation from the Delaware Court of Chancery that it has met all conditions for closing of its acquisition of Acacia Communications,” the company stated today.

Maynard, Massachusett-based Acacia sells specialized processors that are used inside data center networking equipment and submarine communications cables to process traffic. The firm’s products include silicon photonics chips that turn electronic data into light and vice versa so that the information can be sent via fiber-optic cables. Acacia also makes digital signal processors, which help carry out the complex computations required to efficiently transport data over optical networks.

Completing the acquisition would be a win for Cisco because it could give the company a new source of revenue growth in the infrastructure market. Acacia reported sales of $158.5 million in the third quarter of 2020, up from $119.6 million a year earlier. Another notable factor behind Cisco’s 2019 decision to acquire Acacia is that the networking giant uses its silicon in some products.

The $2.6 billion Cisco agreed to pay at the time amounted to $70 per share, a 46% premium to the chipmaker’s last closing price before the announcement of the deal. Cisco earlier spent $600 million to acquire Luxtera Inc., another maker of chips for optical networks. 

Photo: Cisco