Cisco wins a restraining order that stops Acacia from abandoning the merger deal

Acacia Communications Inc. (NASDAQ: ACIA) terminated its merger deal valued at £2.09 billion with Cisco Systems Inc. (NASDAQ: CSCO) on Friday. The optical component maker said it failed to receive the regulatory approval from China within the allotted time.

Cisco approached the court on the same day, requesting a restraining order to stop Acacia from abandoning the deal. Chancellor J. Travis Laster approved Cisco’s appeal after a hearing on Saturday, ordering Acacia to abide by the agreement until the court further evaluates Cisco’s claims.

Acacia closed about 1.5% up on Friday. At £58.68 per share, the stock has recovered significantly from the low of £46 per share in March. Acacia performed slightly upbeat in 2020 with an annual gain of close to 7%.

Cisco’s lawyer says Acacia might be looking for a more generous offer

According to Cisco’s lawyer, William Lafferty, Acacia wishes to breach the agreement because it believes that its now valued significantly more than it was at the time when it entered the deal with Cisco. Ultimately, the Maynard-based company would want to negotiate a higher price for the deal. Lafferty said:

“It has every motivation to walk away and terminate the deal that it has struck, and that is what is ultimately driving this. For Cisco, on the other hand, the termination or loss of a unique strategic merger like this one is a classic case of irreparable harm.”

Cisco struck a deal to acquire Acacia for £1.92 billion in July 2019. The move, as per the company, was to expand its share in the spending on the latest generation 5G telecoms networks. Last month, the San Jose-based company said it will acquire UK’s IMImobile plc for £543 million.

Cisco says China’s SAMR confirmed that it had met all conditions for the merger

In its statement, Cisco also highlighted that it had received confirmation from China’s State Administration for Market Regulation (SAMR) on Thursday that it had met all conditions to proceed with the merger.

In a report published in November, Cisco Systems said that its earnings and revenue came in higher than what analysts had anticipated, in the fiscal first quarter. The company also gave a strong forecast for the future.

Cisco shares closed more than 2% up on Friday. The networking giant ended up with a roughly 8% decline in the stock market last year. At the time of writing, it is valued at £140.36 billion and has a price to earnings ratio of 18.29.