Cisco Systems to buy Acacia Communications for $2.6bn

Network gear maker Cisco Systems has agreed to buy optical component maker Acacia Communications for $2.6bn.

Under the terms of the deal, Cisco will pay $70.00 per share in cash, which is a premium of about 46% to the Acacia closing price on Monday.

David Goeckeler, executive vice president and general manager of Cisco's networking and security business, said: "By innovating across software, silicon and optics, Cisco is reinventing every domain of the network with our intent-based architectures.

"With the explosion of bandwidth in the multi-cloud era, optical interconnect technologies are becoming increasingly strategic. 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."

The deal is expected to close in the second half of Cisco's FY2020. Upon completion, Acacia employees will join Cisco's optical systems and optics business within the networking and security business under David Goeckeler.

Acacia’s president and chief executive, Raj Shanmugaraj, said: "Coherent technology has been a game-changer for optical networking and continues to evolve with the deployment of pluggable coherent optics.

"Upon close, Cisco and Acacia will continue to serve and support existing Acacia customers. By integrating Acacia technology into Cisco's networking portfolio, we believe we can accelerate the trend toward coherent technology and pluggable solutions while accommodating a larger footprint of customers worldwide."

At 1430 BST, Acacia shares were up 37% at $65.81, while Cisco shares were up 0.6% at $56.53.