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EXFO Acquires EFOS Inc., a Precision Light-Based Curing Technology Company

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

EFOS, a privately held company in Toronto, Ont., is widely recognized as a leader in 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.

"EFOS’ UV and IR light-based adhesive spot curing technologies are critical for the assembly of optical components," said Germain Lamonde, Chairman, President and CEO of EXFO. "We intend to leverage EFOS’ UV and IR light-based curing expertise with the recently acquired Burleigh Instruments’ best-in-class, nano-positioning Inchworm™ technology and our automated component test systems to provide optical component manufacturers with automated solutions.

"The complex nature of photonics and the various optical parameters that need to be optimized render optical testing the pivotal technology in the automated optical component manufacturing process."

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 from hours to mere seconds 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.

"We’re delighted with being part of a solution that will deliver automated manufacturing and testing of optical components," said John Kennedy, President and CEO of EFOS. "As the optical component manufacturing industry moves from manual assembly to semi-automated and fully automated production methods, light-based curing becomes a critical technology."

EFOS, which has 110 employees, reported sales of US$18.0 million for calendar year 2000. Sales at EXFO should increase by US$10 million in fiscal 2001, taking into account EFOS’ 5 months of operation during EXFO’s fiscal year, and by US$30 million for fiscal 2002.

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,, under Acquisitions in the Investors section.

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