Test and measurement firm EXFO is excited about its latest UK deal but the real story is happening behind closed doors, as shareholders and directors grapple with an ownership struggle.

EXFO will provide its testing solutions to UK altnet Hyperoptic, which is building out full fibre broadband in various towns and cities in the UK, it revealed, taking the opportunity to remind us that this contract win comes six months after it brokered a similar deal with incumbent operator Openreach.

The announcement is packed with hyperbole about Nova Fiber, the cloud-based remote fibre testing system EXFO will provide to Hyperoptic, amidst which is a serious message about the need for companies rolling out fixed infrastructure to shoot for a ‘right first time’ deployment and avoid costly truck rolls to fix problems.

All of which is pretty interesting…but perhaps less intriguing than the ownership battle at EXFO that has intensified in the past few weeks but has been going on since November last year.

To put it briefly, rival test and measurement firm Viavi is keen to buy EXFO, but EXFO’s majority shareholder Germain Lamonde refuses to sell and is instead looking to take the company private, despite the fact that on Wednesday Viavi tabled a takeover bid that is higher than his own buyout offer by some margin.

Earlier this month Lamonde, who controls 94% of EXFO’s voting rights, in his own right and through related companies, announced he had reached agreement to take the company private, offering $6 in cash per share to minority holders of subordinate voting shares. A committee of independent board directors unanimously approved the arrangement.

Lamonde’s offer price represented a 62% premium on the shares’ closing price on the Nasdaq on 4 June, the last trading day before the announcement. As such, the arrangement raised no red flags; it seemed to be a done deal.

Until Viavi entered the fray this week – or more accurately, re-entered – that is.

Viavi slapped a $7.50-per-share offer on the table on Wednesday, highlighting the figure’s 103% premium on that 4 June closing price, as well as the fact that it is 25% higher than Lamonde’s going private price.

“There are clear strategic merits for combining Viavi and EXFO to build the leader in communications test and measurement for the next decade. The strength of the combined teams and technology, combined with significantly greater scale and financial resources, would enable strong investment in growth while achieving greater operating leverage than either company could do alone,” Viavi said, in a statement.

It’s hard to argue with that. And indeed, Viavi noted that it expected the EXFO board to agree that its proposal is “considerably more attractive to EXFO shareholders” than the going private plan.

That may well be the case, but Lamonde is having none of it. It his way, or retain the status quo, he said in a statement that followed hot on the heels of Viavi’s offer.

In that statement we also learned that the $7.50-per-share offer from Viavi is its third in under a year. According to Lamonde, the company lodged a $4.75 offer in November last year and upped its figure to $5.25 as recently as May.

“On both occasions, I have indicated clearly to the board of directors of EXFO that, as the controlling shareholder of EXFO, I would not consider any transaction with Viavi and the board consequently concluded that there was no merit in pursuing any discussions with Viavi and did reiterate today to the board that, for the third time, Viavi’s non-binding proposal would not obtain my support as the controlling shareholder,” Lamonde said. He reiterated his belief that it would be more beneficial for EXFO to operate as a private company.

“I want to be crystal clear for the benefit of EXFO’s shareholders and other stakeholders: either the Proposed Transaction that I made at US$6.00 and that was announced on June 7, 2021, is accepted by shareholders or, should EXFO’s shareholders not support this transaction, EXFO will continue its life as a public company. I believe wholeheartedly in the prospects of EXFO as a stand-alone company and I have no intention of changing the current operations of EXFO, including the location of its head office in Québec city,” Lamonde insisted.

Persuading shareholders that $6 is a better deal than $7.50 will be quite an ask, but with such a high level of control over the company, perhaps Lamonde doesn’t need to. Whether or not those minorities have any legal recourse remains to be seen.

Whether Lamonde truly believes that EXFO is best placed as a standalone company – which is questionable, in a world in which scale usually wins out – or whether this is a classic case of control freakery from a company founder is also a question that for now remains unanswered, although its hard not to lean towards the latter. “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, strategically positioned for the evolving and dynamic future of the communications test and measurement industry,” Lamonde said.

The only comment from Lamonde that really matters at this stage though is this one: “my shares are not for sale.”