Cisco closes $4.5B deal on optical powerhouse Acacia

After some legal wrangling earlier this year, Cisco has closed the $4.5 billion deal for optical maker Acacia Communications, Inc. 

Cisco coveted Acacia for its high-speed, optical interconnect technologies that let data center operators, webscale companies and service providers offer ever-faster service access to widely distributed resources. It also reinforces Cisco’s commitment to optics as a critical building block for networks of the future. 

“Acacia offers a complete portfolio of long-distance data-transmission solutions that address the full range of applications in the data-center-interconnect and wide-area network segments for metro, regional, long haul, and subsea links,” wrote Bill Gartner, senior vice president and general manager of Cisco’s Optical Systems and Optics Group in a blog about the acquisition.

And there are other benefits, according to Gartner. “The Acacia acquisition also addresses another trend we’re seeing—the move from chassis-based optical line systems to pluggable technology—for customers who want to simplify operations and reduce the complexity of managing multiple layers in the network. These pluggable modules would be plugged directly into a router or switch,” Gartner wrote.

Cisco sees the Acacia technology helping it lead customer transition to the 400G-plus market “with a disruptive technology that collapses the IP and optical layers in the form of pluggable coherent technology,” Gartner stated. 

The companies had been in court against each other in January when Cisco filed for a temporary restraining order to prevent Acacia from terminating a 2019 acquisition agreement. Cisco’s move followed an Acacia proclamation that stated the company “has elected to terminate its merger agreement with Cisco Systems, Inc., effective immediately.”

In the weeks that followed, a revamped agreement sweetened the original deal of $2.6B to $4.5B and put the legal action to rest. 

Acacia employees join Cisco’s optics business as part of its Mass-Scale Infrastructure Group.