EXFO acquires EFOS Inc.

Mar. 7, 2001--EXFO Electro-Optical Engineering Inc. announced it has entered into a definitive agreement to acquire EFOS Inc. for 3.7 million EXFO shares and $25 million in cash.

EXFO Electro-Optical Engineering Inc. (NASDAQ: EXFO, TSE: EXF) announced it has entered into a definitive agreement to acquire EFOS Inc. for 3.7 million EXFO shares and $25 million in cash. At the close of markets on March 5, 2001, the total transaction was worth approximately $122 million.

EFOS, a privately held company in Toronto, Ont., is a provider of precision light-based adhesive spot curing technologies as well as curing process control for the global optical component manufacturing market. EFOS' products deliver precise doses of the appropriate spectral light onto photosensitive and heat-cured adhesives to significantly reduce bonding time and increase repeatability in optical component manufacturing.

Light-based curing, which is used in a number of active and passive component manufacturing applications like fiber-to-die bonding, pigtailing, lens bonding, fiber bonding, potting, fiber-to-wafer bonding, encapsulation, glass-metal bonding and optical component mounting, produces a faster sealant and more precise alignment than traditional bonding methods. Curing time is reduced with EFOS' technologies.

EFOS' light-based curing technologies are supported by an extensive understanding of bonding and material sciences and by a broad intellectual property portfolio, including 12 patents and 16 patents pending.

EXFO plans to retain the personnel, management and facilities of EFOS. The transaction will be accounted for under purchase accounting with goodwill amortized over 5 years. The deal is expected to be neutral in fiscal 2001 on a cash earnings per share basis, taking into account 5 months of EFOS' operations. In fiscal 2002, it should be slightly accretive on a cash earnings per share basis. Cash earnings do not include amortization of goodwill and intangible assets.

The EFOS acquisition has been approved by the board of directors of both companies, but it is subject to regulatory approvals and other customary closing conditions. The highlights of this transaction are available on EXFO's Web site, www.exfo.com, under Acquisitions in the Investors section.

About EXFO:

EXFO is a designer and manufacturer of fiber-optic test, measurement and monitoring instruments for the telecommunications industry. For more information, visit www.exfo.com.

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