Cisco To Buy Acacia Communications For £2.28bn

NetworksWorkspace

Acquisition is aimed at adding cutting-edge pluggable optics to Cisco’s networking portfolio

Cisco said on Tuesday it plans to acquire Acacia Communications, a maker of optical interconnect technologies for companies including telecommunications companies and data centre operators, for some $2.84 billion (£2.28bn) in cash.

The acqusition is Cisco’s largest since it bought AppDynamics for $3.7bn in 2017.

Cisco said it would pay $70 per Acacia share, valuing the firm at about $2.6 billion excluding Acacia’s cash and marketable securities, a premium of about 46 percent on Acacia’s closing price on Monday.

Shares in Acacia rose by about 40 percent early on Tuesday while Cisco’s dropped by roughly 1 percent.

HPEPluggable optics

“With the explosion of bandwidth in the multi-cloud era, optical interconnect technologies are becoming increasingly strategic,” said Cisco vice president and general manager of networking and security David Goeckeler.

“The acquisition of Acacia will allow us to build on the strength of our switching, routing and optical networking portfolio to address our customers’ most demanding requirements.”

Cisco said the acquisition should help it tap into a trend from chassis-based optical systems to pluggable optics.

“Functions that were traditionally delivered in separate chassis-based solutions in a separate optical layer will be available in a pluggable form factor as part of the IP layer– offering significant benefits for network operators in terms of operational simplicity and lower cost,” said Bill Gartner, head of Cisco’s optical systems and optics business, in a blog post.

Expansion

Acacia said it would continue to serve its existing customers, which include Cisco itself.

Acacia president and chief executive Raj Shanmugaraj said integration with Cisco’s networking porfolio wuld allow it to accelerate the trend toward coherent technology and pluggable systems while expanding to a larger customer base.

The deal is expected to close in the second half of Cisco’s full year 2020.

In 2018 Cisco said it would buy cloud-based cybersecurity firm Duo Security for $2.35bn and semiconductor firm Luxtera for $660m.