EXFO to acquire InOpticals Inc.

Rhea-AI Summary

EXFO Inc. announced the acquisition of InOpticals Inc., a Taiwanese leader in ultra-high-speed test instruments, enhancing its capabilities in the 400G/800G market. The deal is expected to close by the end of October 2020, expanding EXFO's addressable market by approximately US$150 million to over US$1 billion. The integration of InOpticals' innovative products will bolster EXFO's market presence and facilitate growth in R&D and manufacturing sectors. The acquisition aligns with EXFO's strategic focus on expanding its optical testing offerings.

Positive

• Acquisition increases addressable market by US$150 million to over US$1 billion.
• Combines InOpticals' innovations with EXFO's existing optical test portfolio.
• Strategic move to enhance growth in high-demand 400G/800G sectors.

Negative

• Transaction amount was not disclosed, which may raise concerns about financial transparency.

Expanding test activity in 400G/800G lab and manufacturing markets

QUEBEC CITY, Sept. 9, 2020 /PRNewswire/ - EXFO Inc. (NASDAQ: EXFO) (TSX: EXF) announced today the acquisition of InOpticals Inc., a technology leader offering ultra-high-speed test instruments for the laboratory and manufacturing markets, subject to closing conditions by regulatory authorities.

InOpticals, based in Taiwan, supplies sampling oscilloscopes, bit-error rate testers (BERTs) and other critical test instruments to manufacturers of optical transponders, components and network equipment. Its product portfolio specifically addresses 400G/800G high-growth sectors like silicon photonics-based transceivers, active and passive components as well as integrated test systems for R&D and manufacturing use cases.

InOpticals' solutions will be combined with EXFO's advanced optical test offering, bolstered by the Yenista Optics acquisition in October 2017. This latest acquisition, which is expected to close by the end of October, will increase EXFO's global test and measurement (T&M) addressable market by approximately US$150 million to more than US$1 billion. The amount of the transaction, mostly valued in EXFO shares, was not disclosed.

"EXFO has intensified its focus on the research, development and manufacturing market as demonstrated by strong growth in this segment in recent years," said Germain Lamonde, EXFO's founder and Executive Chairman. "InOpticals brings to EXFO a remarkable product portfolio that is highly complementary and strategic. This synergistic acquisition will allow EXFO to leverage InOpticals' innovative test solutions across global sales channels and expand market share."

"We're excited to be joining EXFO, truly a global leader in optical testing," said Jones Huang, CEO of InOpticals. "Combining EXFO's global reach and market knowledge with our proven innovation capability will allow us to jointly have a more significant impact in this high-growth market."

About EXFO
EXFO (NASDAQ: EXFO) (TSX: EXF) develops smarter test, monitoring and analytics solutions for fixed and mobile network operators, webscale companies and equipment manufacturers in the global communications industry. Our customers count on us to deliver superior network performance, service reliability and subscriber insights. They count on our unique blend of equipment, software and services to accelerate digital transformations related to fiber, 4G/LTE and 5G deployments. They count on our expertise with automation, real-time troubleshooting and big data analytics, which are critical to their business performance. We've spent over 30 years earning this trust, and EXFO employees in over 25 countries work side by side with our customers in the lab, field, data center and beyond.

About InOpticals
InOpticals Inc. is a Hsinchu company founded in 2017 to develop and market high-speed test and measurement instruments.

Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, and we intend that such forward-looking statements be subject to the safe harbors created thereby. Forward-looking statements are statements other than historical information or statements of current condition. Words such as may, expect, believe, plan, anticipate, intend, could, estimate, continue, or similar expressions or the negative of such expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events and circumstances are considered forward-looking statements. They are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in forward-looking statements due to various factors including, but not limited to, macroeconomic uncertainty, including trade wars and recessions; our ability to successfully integrate businesses that we acquire; capital spending and network deployment levels in the communications industry (including our ability to quickly adapt cost structures to anticipated levels of business and our ability to manage inventory levels with market demand); future economic, competitive, financial and market conditions; consolidation in the global communications test, monitoring and analytics solutions markets and increased competition among vendors; capacity to adapt our future product offering to future technological changes; limited visibility with regard to the timing and nature of customer orders; delay in revenue recognition due to longer sales cycles for complex systems involving customers' acceptance; fluctuating exchange rates; concentration of sales; timely release and market acceptance of our new products and other upcoming products; our ability to successfully expand international operations and to conduct business internationally; and the retention of key technical and management personnel. Assumptions relating to the foregoing involve judgments and risks, all of which are difficult or impossible to predict and many of which are beyond our control. Other risk factors that may affect our future performance and operations are detailed in our Annual Report, on Form 20-F, and our other filings with the U.S. Securities and Exchange Commission and the Canadian securities commissions. We believe that the expectations reflected in the forward-looking statements are reasonable based on information currently available to us, but we cannot assure you that the expectations will prove to have been correct. Accordingly, you should not place undue reliance on these forward-looking statements. These statements speak only as of the date of this document. Unless required by law or applicable regulations, we undertake no obligation to revise or update any of them to reflect events or circumstances that occur after the date of this document.

EXFO-C

View original content:http://www.prnewswire.com/news-releases/exfo-to-acquire-inopticals-inc-301126247.html

SOURCE EXFO Inc.

FAQ

What is the significance of EXFO's acquisition of InOpticals?

The acquisition enhances EXFO's position in the 400G/800G test market and increases its addressable market by approximately US$150 million.

When is the acquisition of InOpticals expected to close?

The acquisition is expected to close by the end of October 2020.

What impact will the acquisition have on EXFO's growth?

The integration of InOpticals' products is expected to support EXFO's growth in the R&D and manufacturing sectors.

How does the acquisition align with EXFO's strategic goals?

It aligns with EXFO's focus on expanding its optical testing capabilities and market presence in high-growth segments.