What happened
Shares of Acacia Communications (ACIA) spiked today after the company said that it would terminate a merger agreement with Cisco Systems (CSCO 0.59%).
The tech stock gained as much as 13.6% today and was up by 13% as of 11:03 a.m. EST.
So what
Acacia said that it no longer has an obligation to close the merger because the agreement didn't get the necessary regulatory approvals.
Image source: Getty Images.
The company issued a statement saying, "Because approval of the Chinese government's State Administration for Market Regulation was not received within the timeframe contemplated by the merger agreement, Acacia did not have an obligation to close the merger before the arrival of the January 8, 2021, extended end date."
The merger was originally announced in July 2019, but today's announcement ends the agreement effective immediately.
With today's share price jump, it appears that Acacia investors are pleased that the company isn't merging with Cisco. The share price is up 19% over the past 12 months following today's gain.
Now what
Cisco is fighting Acacia's termination of the merger agreement and said in its own statement that it's seeking confirmation from a Delaware court that "it has met all conditions for closing of its acquisition of Acacia Communications."
Cisco is also seeking a court mandate that the merger agreement can't be terminated until all court matters have been resolved.
