China Clears Cisco-Acacia Deal With Conditions
By Stephanie Yang
China's antitrust regulator approved Cisco Systems Inc.'s
acquisition of Acacia Communications Inc. Tuesday, clearing the
deal for completion under several conditions aimed to protect
supply to the companies' Chinese customers.
The State Administration for Market Regulation said that the
U.S. telecom-equipment companies and subsequent merged entity must
fulfill existing contracts with Chinese clients and keep commercial
terms unchanged. The conditions, stipulated in a statement on
SAMR's website, also required that Cisco and Acacia continue
supplying certain products without discrimination and unreasonable
Tuesday's approval removed a regulatory barrier that had nearly
unraveled the deal earlier this month. Acacia had moved to
terminate the agreement, first announced in July 2019, claiming
Cisco hadn't received timely approval from Chinese authorities.
Cisco disputed the claim and raised the purchase price by 64%,
cementing a new deal.
The need for Chinese regulatory approval has loomed large over
some major tech deals as waiting times have increased and
U.S.-China relations have soured.
In 2018, a $44 billion deal between Qualcomm Inc. and Dutch chip
maker NXP Semiconductors N.V. fell through after it failed to gain
approval from Chinese regulators before the deal expired. Applied
Materials Inc. recently raised its offer for Kokusai Electric Corp.
to $3.5 billion from $2.2 billion in June 2019 as the semiconductor
equipment companies also await Chinese approval.
China's top market regulator said that it believes the deal
could eliminate or restrict competition in China's optical
transmission system industry, and that the conditions it named
could reduce the expected negative impact on market competition.
The restrictions will remain effective for five years, it said.
Cisco and Acacia didn't immediately respond to requests for
Cisco will pay $115 a share to acquire Acacia, a 64% increase on
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.
Acacia would be the latest in a string of companies in the
optics space that the San Jose, Calif-based Cisco has acquired in
recent years, including Lightwire Inc., CoreOptics Inc. and Luxtera
Inc. Cisco said in 2019 that the acquisition would enable its users
to drive more data over high-speed networks.
--Lekai Liu contributed to this article.
Write to Stephanie Yang at firstname.lastname@example.org
(END) Dow Jones Newswires
January 19, 2021 09:13 ET (14:13 GMT)
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