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In a bid to address the increasing optical interconnect technologies market, global technology leader, Cisco, has announced the acquisition of Acacia Communications. An existing Cisco supplier, Acacia designs and manufactures high-speed, optical interconnect technologies that allow webscale companies, service providers, and data center operators to meet the fast-growing consumer demands for data.

Under the terms of the agreement signed by the companies, Cisco agreed to acquire Acacia for $70.00 per share in cash, or for approximately $2.6 billion on a fully diluted basis, net of cash and marketable securities. As Cisco and Acacia come together, Cisco plans to support Acacia’s existing customers and new customers that want industry-leading coherent optics, digital signal processing / photonic integrated circuit modules, and transceivers for use in networking products and data centers.

According to David Goeckeler, Executive Vice President and General Manager of Cisco’s Networking and Security business, by innovating across software, silicon and optics, Cisco is looking to reinvent every domain of the network with its intent-based architectures. With the explosion of bandwidth in the multi-cloud era, optical interconnect technologies are becoming increasingly strategic. The acquisition of Acacia will allow the company to build on the strength of its switching, routing and optical networking portfolio to address customers’ most demanding requirements.

Cisco offers a full portfolio of optical systems to support webscale, service provider, enterprise, and public sector customer segments. These optical systems address performance, power, and cost requirements. Acacia’s technology will enrich Cisco’s optical systems portfolio. It will also allow the growing number of customers transitioning from chassis-based systems to pluggable technology to simplify operations and reduce network complexities. Upon close, Cisco and Acacia will continue to serve and support existing Acacia customers. By integrating Acacia technology into Cisco’s networking portfolio, the companies believe they can accelerate the trend toward coherent technology and pluggable solutions while accommodating a larger footprint of customers worldwide.

The acquisition is expected to close during the second half of Cisco’s FY 2020, subject to customary closing conditions and required regulatory approvals. Upon completion of this transaction, Acacia employees will join Cisco’s Optical Systems and Optics business within the networking and security business under David Goeckeler.