By Yifan Wang 
 

A Chinese market regulator on Tuesday approved Cisco Systems Inc.'s acquisition of Acacia Communications Inc. on the condition the companies comply with rules aimed at reducing the deal's possible impact on market competition.

The telecom-equipment companies and the subsequent merged entity are required to continue fulfilling existing contracts with Chinese clients and keep relevant commercial terms unchanged, the State Administration for Market Regulation said Tuesday.

Beijing's top market regulator also requires Cisco and Acacia to continue supplying certain products to Chinese clients without discrimination and unreasonable deal terms.

The regulator said that it believes the deal could eliminate or restrict competition in the optical transmission system industry in China, and that these conditions could reduce the expected negative impact on market competition.

The restrictions will remain effective for five years, it said.

Cisco last week boosted its purchase price for Acacia, after the latter moved to terminate the deal as the companies awaited Chinese approval.

Cisco will now pay $115 a share to acquire Acacia, a 64% increase to the original price of $70 a share agreed to in July 2019. The deal values Acacia at about $4.5 billion on a fully diluted basis.

 

Write to Yifan Wang at yifan.wang@wsj.com

 

(END) Dow Jones Newswires

January 19, 2021 06:50 ET (11:50 GMT)

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