Monday afternoon Acacia Communications fired off the latest salvo in its dustup with Cisco over its attempt to cancel the two companies' $2.6 billion merger.
Acacia announced on Monday that it had filed its answer and "affirmative defenses" in response to the complaint filed Friday by Cisco in the Delaware Court of Chancery. At the same time, Acacia also filed a counterclaim against Cisco that seeks a "declaration that it 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."
"Acacia intends to vigorously defend itself against Cisco's claims," said Acacia CEO Murugesan Shanmugaraj, according to a Seeking Alpha transcript from Monday.
Shanmugaraj spoke during an investor conference call in regards to Acacia's fourth quarter and full-year results for 2020. Acacia didn't conduct a Q&A at the end of its conference call. As of Tuesday morning, Cisco didn't have a comment on Acacia's counterclaim.
To recap, Acacia announced Friday morning that it was terminating the deal with Cisco after saying the merger failed to garner regulatory approval in China in the required timeframe. Acacia said approval of the Chinese government’s State Administration for Market Regulation (SAMR) was not received by the Jan. 8 deadline.
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Following on the heels Acacia's announcement, Cisco said on Friday that it was seeking confirmation from the Delaware Court of Chancery that it had met all conditions for the closing of its acquisition of Acacia Communications, including China.
After Acacia's announcement, Cisco sued Acacia in Delaware Chancery Court. After a hearing, Chancellor J. Travis Laster granted Cisco's request for a restraining order and to expedite the proceedings, according to a story by Bloomberg.
RELATED: Judge grants temporary court order to block Acacia from ending $2.6B deal with Cisco
Cisco put out a press release after Acacia's that said it was notified by SAMR on Thursday that the agency had determined that its submission was "sufficient to address the relevant competition concerns." Sunday night Cisco CEO Chuck Robbins took to Twitter to thank SAMR for approving the deal.
"Acacia believes that a January 7, 2021 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 said in Monday's press release.
The deal was supposed to close in the second half of Cisco's fiscal 2020 after it had been approved by the United States, Germany and Austria. China, which was a closing condition of the deal, became a sticking point for the closure after SAMR dragged its heels.
In July, both companies issued a press release that said the merger was awaiting approval from SAMR, and that "Cisco and Acacia remain actively engaged with SAMR and expect the acquisition to receive regulatory clearance."
In Monday's press release, Acacia said it "continues to be bound by the terms of the merger agreement pursuant to the temporary restraining order granted by the Delaware Court of Chancery pending resolution of the litigation with Cisco or as otherwise agreed by the parties."
RELATED: Cisco's Acacia deal a key component of its core networking strategy
With Acacia, Cisco would have a larger optical product portfolio to sell to web-scale providers, service providers and data center operators that are adding cloud and data capacity. Acacia's optical portfolio would also position Cisco to win a bigger portion of 5G-related revenues from carriers.
Just over a year ago, Cisco announced its "Internet for the Future" strategy at an event in San Francisco, which included its own solutions across silicon, optics and software. With its deep expertise in coherent optics, Acacia would be a key piece in Cisco's core networking strategy.