March 12, 2010 — EXFO Inc announced today the acquisition of NetHawk Oyj (“NetHawk”), the second-largest provider of 2G, 3G and 4G/LTE protocol analyzers and simulators for wireless network equipment manufacturers (NEMs) and network operators, in an all-cash transaction estimated at €37.3 million for all outstanding shares on a fully diluted basis, or €27.6 million excluding NetHawk’s net cash.

EXFO entered into a purchase agreement to acquire 91% of NetHawk’s outstanding shares and will purchase the remaining shares pursuant to a statutory procedure under the Finnish Companies Act. An additional earn-out, based on sales over the next three years, could raise the total value of the transaction by €8.7 million.

NetHawk, headquartered in Oulu, Finland, brings to EXFO almost 20 years of wireless expertise and customer relationships. Key products consist of protocol analyzers for protocol development, network deployment, optimization and performance measurement as well as network simulators for load generation, regression and functional testing. Solutions cover a wide range of wireless technologies, namely 2G, 3G and 4G/LTE. It is estimated that NetHawk holds the No. 2 position for both protocol analysis and network simulation in terms of global market share, including a market-leading position in testing high-growth 4G/LTE networks.

NetHawk has also developed a 2G, 3G and 4G/LTE service assurance solution, based on iPro’s 1G and 10G wireline stream capture and M5’s deep protocol and KPI analysis, to focus on testing the core and radio access networks of a wireless telecommunications infrastructure. This offering is highly complementary to EXFO’s BrixCall, BrixNGN and BrixVision suite of highly scalable service assurance solutions for active and passive monitoring of the application layer on next-generation IP networks.

Frost and Sullivan, a global growth consulting company, forecasts the Protocol Analyzer and Network Monitoring Market for wireless networks will grow from US$595.2 million in 2008 to US$814.2 million in 2013. The LTE Test Equipment Market is expected to increase at a compound annual growth rate of 56.0% during this period. NetHawk’s total addressable market is currently estimated at US$610 million.

“This acquisition represents a defining milestone in EXFO’s near 25-year history, since it not only transforms us into a global force in wireless testing, but it also moves us among the top five suppliers in the telecom test and service assurance industry with more than 1,600 employees in 25 countries supporting in excess of 2,000 customers,” said Germain Lamonde, EXFO’s Chairman, President and CEO. “NetHawk’s excellent positioning for the high-growth 3G and 4G/LTE test markets and strong customer relationships forged over almost 20 years underlie the rationale behind this deal. Joining forces makes the new EXFO far more relevant to global network operators and NEMs, as we can now offer one of the most advanced and complete product portfolios for both fixed and mobile networks. In a nutshell, I’m confident the whole is far greater than the sum of the parts and we intend to press forward on our long-term strategy to deliver growth in revenues and earnings. I’m pleased to welcome the entire NetHawk staff to the EXFO family.”

“We’re genuinely pleased to become a part of EXFO, a world-class organization which like NetHawk has a proven history of innovation and all-around execution,” said NetHawk CEO Hannu Huttunen. “EXFO’s global brand reputation and market presence, combined with our deep wireless knowledge and customer relationships, are sure to jointly carry us to new heights as the industry undergoes accelerated 3G deployment and LTE adoption to cope with explosive bandwidth demand largely created by smart phones.”

NetHawk posted revenue of €28.5 million and EBITDA of €4.2 million for the fiscal year ended December 31, 2009. (EBITDA is defined as net earnings before interest, taxes, depreciation and amortization). EXFO plans to retain NetHawk’s management, R&D, sales and marketing teams of approximately 370 employees mainly located in Finland, India and the United States. Revenue from NetHawk will be recognized as part of EXFO’s protocol business, under its Telecom Division.

The acquisition is expected to be neutral for the remainder of fiscal 2010 and accretive in fiscal 2011, excluding after-tax amortization of intangible assets and stock-based compensation costs.