Shares of Acacia Communications (ACIA) - Get Report jumped on Friday after the maker of modules and semiconductors terminated its $2.6 billion merger agreement with Cisco (CSCO) - Get Report, citing lack of approval from Chinese regulators.
Cisco told Acacia that it may dispute Acacia’s right to have terminated the merger agreement.
Shares of the Maynard, Mass., company at last check rose 8.6% to $78.70.
Shares of Cisco, the San Jose, Calif., communications-equipment major, were up 0.9% at $44.35.
Approval from the Chinese government’s State Administration for Market Regulation was not received before the Jan. 8 deadline, the equipment maker said.
"Acacia exercised its right to terminate the proposed transaction in accordance with the terms of the merger agreement," the company said in a statement.
"Because approval of the Chinese government’s State Administration for Market Regulation was not received within the time frame contemplated by the merger agreement, Acacia did not have an obligation to close the merger before the arrival of the Jan. 8, 2021, extended end date," the company said.
The deal was expected to close during the second half of Cisco's fiscal year.
The accord was originally signed in July 2019, when Cisco agreed to pay about $70 cash for each Acacia share outstanding, a 46% premium.
Cisco earlier had said Acacia's technology would enrich its optical-systems portfolio and enable the growing number of customers transitioning from chassis-based systems to pluggable technology to simplify operations and reduce network complexities.
At closing, Acacia employees were supposed to join Cisco's optical-systems and optics business within the networking and security division.