“I will not consider any alternative change of control transaction of EXFO,” says company founder & chairman
EXFO Founder and Chairman Germain Lamonde has extended an acquisition offer for outstanding shares that will take EXFO private, and when Viavi Solutions used that offer as an opportunity to press its repeated bid to acquire EXFO, Lamonde issued a stinging public statement indicating that minority shareholders can either accept his offer, or allow EXFO to remain a public company — but Lamonde, who owns a controlling interest in EXFO, will not allow a deal with competitor 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 US$4.75 and in May 2021 at a price of US$5.25, respectively,” Lamonde said in a press release that he released personally, not under EXFO’s auspices. “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.” Because of Lamonde’s opposition to an acquisition by Viavi, he said, the board decided not to pursue further discussions with Viavi after its two offers. Lamonde said in his statement that he “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.”
According to Lamonde’s statement, he directly or indirectly controls 61.46% of the issued and outstanding shares of EXFO and 93.53% of the voting rights associated with those shares. On June 7, Lamonde made an offer that would buy out the remaining minority shareholders and take EXFO private under his ownership, at a price of $6 per share — which Lamonde noted represented a 63% premium to the 20-day volume-weighted average trading price of the stock on the NASDAQ.
“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 in his statement. “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 … arrangement that I initiated.”
According to SEC filings, Lamonde’s offer allowed EXFO’s board of directors to also consider other offers. Today, Viavi put forward a proposal that offered $7.50 per share, which would value EXFO at about $430 million.
“There are clear strategic merits for combining Viavi and EXFO to build the leader in communications test and measurement for the next decade,” Viavi argued in its public statement on its offer. “The strength of the combined teams and technology, combined with significantly greater scale and financial resources, would enable strong investment in growth while achieving greater operating leverage than either company could do alone. Viavi values the expertise, skills and experience of the EXFO key employee talent and believes their retention and continued commitment is critical to the success of the combination. Viavi intends to continue EXFO’s brand and legacy, recognizing EXFO’s strong reputation built on years of quality product development, engineering excellence and customer service, and continue EXFO’s presence and operations in Quebec to complement and expand upon Viavi’s long-standing engineering and product development teams in Quebec and Ottawa.” Viavi said that its board had already unanimously approved its offer and that financing wouldn’t be an issue because it has the cash on-hand to make the purchase.
Lamonde’s public statement came out shortly thereafter and left no doubt about his thoughts on the matter.
“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,” Lamonde wrote. “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. …
“I want to be crystal clear for the benefit of EXFO’s shareholders and other stakeholders: either the Proposed Transaction that I made at US$6.00 … is accepted by shareholders or, should EXFO’s shareholders not support this transaction, EXFO will continue its life as a public company,” Lamonde concluded. “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.”
EXFO’s board has not yet released a statement of its own on the competing offers. The board had put together a special committee of independent board members, with Lamonde and CEO Phillippe Morin recusing themselves, to consider the transaction with Lamonde; the committee had unanimously recommended moving forward with Lamonde’s proposed transaction.