EXFO Stock Price: Over 60% Increase Explanation

By Amit Chowdhry ● Jun 7, 2021
  • The stock price of Exfo Inc (NASDAQ: EXFO) increased by over 60% during intraday trading. This is why it happened.

The stock price of Exfo Inc (NASDAQ: EXFO) increased by over 60% during intraday trading. Investors are responding positively to EXFO announcing that it has entered into an arrangement agreement pursuant to which 11172239 Canada Inc. (PurchaseCo), a corporation controlled by Germain Lamonde, EXFO’s founder and majority shareholder, will acquire all of the issued and outstanding subordinate voting shares of the corporation, except for 3,672,474 subordinate Voting Shares already controlled, directly or indirectly by Lamonde.

As of June 7, 2021, Germain Lamonde controls, directly or indirectly, the excluded shares and 31,643,000 multiple voting shares of the corporation, representing 14.22% of the issued and outstanding subordinate voting shares, and 100% of the issued and outstanding Multiple Voting Shares and, respectively, representing collectively 61.46% of the issued and outstanding shares of the corporation and 93.53% of the voting rights attached to all the issued and outstanding shares.

Deal Highlights

The holders of subordinate voting shares (other than the Excluded Shares) will receive US $6.00 per subordinate Voting Share in cash, representing a 62% premium to the closing price per subordinate Voting Share on the Nasdaq Global Select Market on June 4, 2021, and a 63% premium to the 20-day volume-weighted average trading price for the subordinate Voting Shares on the Nasdaq Global Select Market for the period ending on June 4, 2021, the last trading day prior to the date of this announcement.

The board of directors of EXFO — with Lamonde and Philippe Morin having recused themselves from the meeting — acting on the unanimous recommendation of the special committee of the Board of Directors comprised entirely of independent directors unanimously approved the arrangement and unanimously recommends that shareholders vote in favor of the arrangement at a special meeting of shareholders held to approve the arrangement.

In connection with the deal, the National Bank of Canada and Investissement Québec have provided commitment letters to PurchaseCo for senior and subordinated debt financing, respectively — representing an aggregate principal amount sufficient to cover the purchase of the subordinate Voting Shares (other than the Excluded Shares). And National Bank of Canada will act as the Administrative Agent of the lending syndicate for the senior debt financing and National Bank Financial Markets will act as the Lead Arranger and Sole Bookrunner.

KEY QUOTE:

“This transaction is in the best interests of all of EXFO’s stakeholders. The Arrangement will provide holders of subordinate voting shares with a significant cash premium and immediate liquidity for their subordinate Voting Shares while ensuring the long-term success of EXFO as a private company for its employees, business partners, and all the other stakeholders. My objective is to continue working with our talented management team and employees globally to further develop what has become a successful global Test and System provider while maintaining its headquarters in Québec City.”

— Germain Lamonde, Founder and Executive Chairman of the Board

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.