Viavi Proposes Acquisition of EXFO, Co-Founder Says It Does Not Have His Support
Thursday, June 17, 2021 | Comments

Viavi Solutions submitted a proposal to the board of directors of EXFO to acquire all outstanding subordinate voting shares and multiple voting shares. EXFO Co-Founder and controlling stakeholder Germain Lamonde released a statement saying that he would not consider any transaction with Viavi.

“This is the third time that Viavi has made an offer to acquire EXFO, after its first and second attempts in November 2020 at a price of $4.75 and in May 2021 at a price of $5.25, respectively,” Lamonde said in his statement. “On both occasions, I have indicated clearly to the board of directors of EXFO that, as the controlling shareholder of EXFO, I would not consider any transaction with Viavi, and the board consequently concluded that there was no merit in pursuing any discussions with Viavi and did reiterate today to the board that, for the third time, Viavi's non-binding proposal would not obtain my support as the controlling shareholder.”

Viavi proposed acquiring EXFO at a price of $7.5 per share and values the company at approximately $430 million. The proposal follows an announcement from Lamonde about his intentions to take EXFO private.

“For a number of years, I was regularly contacted by shareholders expressing concern over the trading price and liquidity of EXFO's shares,” Lamonde said. “Having considered from time to time whether it would be more beneficial for the corporation's medium- and long-term prospects to operate as a private company, and considering the concerns expressed by shareholders, I stand by the merits of the transaction by plan of arrangement that I initiated ... As I have previously indicated numerous times to the board of EXFO, as a controlling shareholder, I will not consider any alternative change of control transaction of EXFO, such as the one proposed by Viavi, and my shares are not for sale. I have founded EXFO and been involved in the company over the last 35 years, and I believe that the business is well-managed, growing, strategically positioned for the evolving and dynamic future of the communications test and measurement industry.”

Lamonde said that shareholders would either accept the proposed move to a private company or it would continue as a publicly traded company.

“I believe wholeheartedly in the prospects of EXFO as a stand-alone company, and I have no intention of changing the current operations of EXFO, including the location of its head office in Québec City.”

Viavi released a statement of its own and expressed disappointment in the decision.

“We are extremely disappointed that, without engaging with us, Mr. Lamonde and the EXFO special committee quickly rejected our superior proposal to acquire EXFO for US$7.50 per share, all-cash,” the Viavi statement said. “We reiterate our proposal to the EXFO board, which we continue to believe offers compelling value to EXFO shareholders, including Mr. Lamonde, and is in the best interest of all EXFO stakeholders. VIAVI stands ready to engage with Mr. Lamonde and the EXFO Special Committee in order to reach a definitive agreement to implement a transaction."

EXFO’s board of directors released a statement of its own to, it said, clarify the situation.

“Consistent with its fiduciary duties, EXFO's Board of Directors, with Mr. Germain Lamonde and Mr. Philippe Morin having recused themselves from the meeting, reviewed and diligently considered the proposal along with the special committee and their advisors,” the board’s statement said. “The unambiguous statement by the controlling shareholder that he rejects the proposal led EXFO's Board of Directors to conclude that it will not pursue the proposal as it is not capable of being completed.”

The board of directors said it plans to hold a special shareholder meeting on July 30 to address the situation.

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