Famous American network communication company Cisco announced that the company would buy optical component maker Acacia Communications Inc (AICA) for $2.84 billion in cash. The deal is expected to be closed in the second half of Cisco's FY2020.
After Cisco's announcement of the acquisition, Accacia’s share in the premarket trading increased with a fast pace to more than 40%. AICA was going down in recent months, and this acquisition made a skyrocketing rise in the market.
This is Cisco’s biggest purchase after 2017. In 2017, Cisco had purchased business monitoring software company AppDynamics for $3.7 billion. In last August, the company had acquired cybersecurity firm Duo Security for $2.35 billion. The next deal was with semiconductor company Luxtrera for $660 million.
As per the deal between both clients, Cisco will pay $70 for each Acacia share outstanding. “ With the explosion of bandwidth in the multi-cloud area, optical interconnect technologies are becoming increasingly strategic,” Cisco’s network and security business general manager David Geockler said.
The Acquisition of Acacia will be an essential factor for Cisco to improve the on the capacity of the compony's switching, routing, and optical network portfolio to give an advanced service as the reply for customer’s unavoidable requirements.
Acacia has been in the industry for ten years with coherent optical technology. The company based in Maynard, Ma.
The acquisition not only benefits Cisco but Acacia too, according to the president and chief executive officer of Acacia Raj Shanmugaraj. It is going to enhance the company by popularizing the coherent technology and pluggable solution in a better way. It also helps the company to increase customer coverage worldwide, he added.
The tie-up is signaling to build industry to improve Cisco’s intent-based networking. It will also strengthen Acacia’s existing and future customers. Cisco has impressed by Acacia’s coherent optic technology and aiming to bring three major transformations: enhance the capacity on the existing fiber infrastructure; drive down the cost/bit; and automate to lower OPEX and get rid of human error.
According to the deal, Acacia employees will work under David Goeckeler. They will be working for Cisco’s optical system.
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