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Acacia Files Counterclaim Against Cisco On Merger Deal

Responding to the complaint filed by Cisco in the Delaware Court of Chancery, Acacia Communications Inc. (ACIA) said Monday that it filed a counterclaim against Cisco Systems Inc. (CSCO) seeking a declaration that Acacia validly terminated the merger agreement with Cisco because the required Chinese regulatory approval was not obtained and the merger did not close before the agreed-upon termination date under the agreement.

On January 8, Acacia delivered to Cisco a notice to terminate the merger agreement for the proposed acquisition of Acacia by Cisco. The deal was conditioned on the satisfaction or mutual waiver of agreed-upon closing conditions, including obtaining necessary regulatory approvals.

The merger agreement afforded the parties 18 months to obtain the necessary antitrust approvals from the Chinese government before, either Acacia or Cisco could terminate the agreement on January 8, 2021. Such approval was not received before January 8, and Acacia delivered a notice of termination of the merger agreement on that date.

Cisco has initiated litigation against Acacia in Delaware challenging the company's termination of the merger agreement, claiming that the Chinese Government's State Administration for Market Regulation or "SAMR" approval was received on January 7.

Acacia said Monday that it believes that a January 7, email from a SAMR employee stating Cisco's submission was "sufficient to address the relevant competition concerns" does not constitute regulatory approval, as Cisco claims. Acacia plans to vigorously defend itself against Cisco's claims and vindicate its decision to terminate the merger agreement.

In July 2019, Cisco agreed to buy Acacia Communications for $70.00 per share in cash or about $2.6 billion on a fully diluted basis, net of cash and marketable securities.

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