EXFO Electro-Optical Engineering, has acquired all the shares of Navtel (News - Alert) Communications, a provider of Internet Protocol Multimedia Subsystem (IMS) and Voice-over-Internet Protocol (VoIP) test solutions for Network Equipment Manufacturers (NEMs) and Network Service Provider (NSP) labs. Consideration paid consists of C$11.0 million in cash, subject to adjustments on working capital.

 

A privately-held company in the Toronto area, Navtel Communications specializes in testing next-generation IP networks that are increasingly combining wireline and wireless technologies.

 

Germain Lamonde, chairman, president and CEO at EXFO, said this acquisition fits strategically with his company’s long-term plan to deliver strong growth in their Protocol test business, which posted a “compound annual growth rate of 64 percent in the last two years and continues to deliver solid growth at the mid-point of fiscal 2008.”

 

He added, “Navtel's cutting-edge technology strengthens our offering for NEMs and NSP labs which, in turn, have a significant influence on product selections made by NSPs.”

 

Navtel’s InterWatch platforms are fully scalable simulation and analysis test stations available in rack-mountable and portable formats. According to company officials, these solutions can perform several critical tests—capacity, performance, stress and load testing—on various network devices to assure their ability to perform under real-life, IP-based, multi-media traffic conditions.

 

IMS allows wireline and wireless carriers to use a common IP application system to deliver new multi-media services that can be combined with legacy services across a number of different access technologies.

 

Officials pointed out that Navtel has positioned itself as a leading-edge supplier of IMS test solutions. In addition, the company also offers a comprehensive suite of VoIP and Generalized Multi-Protocol Label Switching (GMPLS) test solutions, and also a wide range of legacy test protocols.

 

“This acquisition also enables us to expand into the high-growth IMS and VoIP test markets, whose technologies are currently in their early stages,” said Lamonde.

 

According to Lamonde, EXFO intends to leverage these technologies throughout their entire lifecycle, especially as they mature into portable test solutions for the NSP market in which EXFO is the world's second-largest supplier.

 

”We also plan to take advantage of Navtel's strong relationships with Tier-1 NEMs and leverage our own worldwide sales presence with NSPs to accelerate sales growth, while positively impacting earnings since Navtel's software-intensive test solutions generate high gross margins,” Lamonde said.

 

The deal is expected to be neutral to EXFO's earnings for the remainder of fiscal 2008 and accretive in fiscal 2009, excluding amortization of intangible assets to be accounted for in the acquisition.