Germain Lamonde, executive chairman, founder, and majority shareholder of test instrument company EXFO, yesterday flatly rejected an offer by competitor VIAVI Solutions Inc. (NASDAQ: VIAV) to buy his company, despite the fact that VIAVI offered $1.50 more per share than his June 7 offer to take the company private. EXFO’s board, with Lamonde and CEO Philippe Moran recused, subsequently decided not to pursue VIAVI’s offer further.
In announcing the transaction to take the company private, EXFO had revealed that Lamonde, who owns 61.46% of the issued and outstanding shares of the company and 93.53% of the voting rights attached to all the issued and outstanding shares of EXFO, would not consider alternative ownership arrangements. In yesterday’s statement, Lamonde reiterated that either the company would become a private concern under his terms or would maintain its current publicly traded status.
“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 stated. “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, [and] strategically positioned for the evolving and dynamic future of the communications test and measurement industry.”
Lamonde also shed some light on why he decided to take the company private. “For a number of years, I was regularly contacted by shareholders expressing concern over the trading price and liquidity of EXFO's shares,” he explained. “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 which was announced on June 7, 2021, at a price of US$6.00 per share in cash.”
That price reflects a premium of 63% to the 20-day volume-weighted average trading price for the subordinate voting shares (the shares Lamonde doesn’t own or control) of EXFO on the Nasdaq Global Select Market for the period ending on June 4, 2021. Nevertheless, VIAVI offered a greater premium with its $7.50 per share offer announced June 16 – 103% to the June 4 closing price, the bidder pointed out.
However, VIAVI acknowledged that Lamonde had previously expressed no interest in a different ownership arrangement. The EXFO board cited Lamonde’s position as well in its statement today, basically saying its hands are tied. “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 said via its press statement.
