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Cisco Systems Agrees to Buy Acacia Communications for $2.6 Billion in Cash -- Barrons.comCisco Systems Agrees to Buy Acacia Communications for $2.6 Billion in Cash -- Barrons.com Dow Jones By Eric J. Savitz Cisco Systems (ticker: CSCO) is shopping again. The company on Tuesday announced a deal to buy Maynard, Mass.-based optical networking semiconductor company Acacia Communications (ACIA) for $70 a share in cash, or about $2.6 billion on a fully diluted basis net of cash and marketable securities. The price is about a 46% premium to Acacia's $48.06 closing price yesterday. Cisco expects to close the deal during the second half of the company's July 2020 fiscal year, subject to required regulatory approvals and other customary conditions. Acacia employees will join Cisco's Optical Systems and Optics business within the networking and security business. David Goeckeler, executive VP of Cisco's networking and security business, said in a statement that the deal will "allow us to build on the strength of our switching, routing and optical networking portfolio to address our customers' most demanding requirements." In a blog post on the deal, Bill Gartner, who heads Cisco's Optical Systems and Optics, wrote that Acacia's products "are designed to transform communications networks through improvements in performance, capacity and cost." He added that Acacia's coherent optics technology will build on Cisco's strength in optical, silicon, and software technologies. In May, Acacia reported Q1 revenue of $105.2 million, up 44% year over year, with non-GAAP profit of 37 cents a share; the company projected Q2 revenue of $104 million to $112 million, with non-GAAP profit of 28 to 42 cents a share. Wall Street analysts have been projecting full-year revenue for the company of $455.5 million, up 34%, increasing to $535.8 million in 2020, with non-GAAP profit of $1.64 a share this year and $2.09 a share next year. That implies Cisco is paying about 33 times next year's earnings for Acacia, or about 4.9 times next year's sales. Wall Street appears to like the deal. Cisco stock was recently up 0.7% to $56.56, while Acacia shares rose 35% to $65.00. The news is driving up stocks of some other optical networking stocks, with NeoPhotnics (NPTN) up 11% to $4.73, and Applied Optoelectronics (AAOI) up 9.8% to $10.53. |
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