The Cell Formation Problem (CFP) is an NP-hard optimization problem considered for cellular man- ufacturing systems. Because of its high computational complexity there have been developed a lot of heuristics and almost no exact algorithms for solving this problem. In this paper we suggest a branch- and-bound algorithm which provides exact solutions for the CFP with the grouping efficacy objective function. To linearize this fractional objective function we apply the Dinkelbach approach. Our algorithm finds optimal solutions for 24 of the 35 popular benchmark instances from literature and for the remaining instances it finds good solutions close to the best known. The difference in the grouping efficacy with the best known solutions is always less than 1.5%.