Polatis and Continuum Photonics, leaders in optical switching, announce definitive agreement to merge

Fiber Optics Weekly Update, August 5, 2005

Combined company will become a leading provider in the rapidly growing optical networking, defense, and test lab markets

Continuum Photonics Inc. and Polatis Ltd., makers of optical switch subsystems and module products, jointly announced a definitive agreement to merge. The companies will combine their technology, product lines, and personnel to create a single business, dedicated to providing customers with a full range of optical switch component and system products for the telecommunications, data networking, and defense industries. To serve its expanding customer base, the new company will maintain its offices and operations in both the United States and the United Kingdom. Under this agreement, existing investors will contribute additional capital to support the company's growth. The merger is expected to close by August 15th.

Continuum Photonics was founded in 1998 and is located near Boston, Massachusetts. Continuum currently offers a family of optical switch products based on its patented DirectLight(R) switching technology. Due to its unique switching architecture, DirectLight provides integrated switching, optical attenuation (gain equalization), and power monitoring. Continuum has aimed its existing products at the Optical Automation Systems (OAS) market, with customers in carrier labs, data equipment companies, and telecom equipment manufacturers. Continuum's investors include Flagship Ventures, Prism Venture Partners, JK&B Capital, Boston Millennia Partners, Harris and Harris Group, GE Capital, MTDC, Arcadian Venture Partners, and Gainesborough Investments.

Polatis was founded in 2000, and is headquartered in Cambridge, U.K. It currently offers products based on its Micro-Actuation and Sensing System (MASS) platform, including a range of optical switch systems, modules, and cards for both single-mode and multi-mode fiber applications. The patented MASS technology sets the benchmark for fast and ultra-low-loss matrix switching, requiring no light to establish a connection. Polatis has aimed its existing products at communications, aerospace, and defense customers. In March 2005, Polatis announced a worldwide sales distribution agreement with JDS Uniphase. Polatis is funded through investments by 3i, Alta Berkeley, Prelude, and EonTech.

With this merger, the two companies will combine their existing product lines and integrate technologies to create advanced product platforms. The combined product lines will enable the new company to provide the widest spectrum of products to its existing customers in the communications, test automation, and defense industries. Both companies have also been developing new products in response to the growing demand for wavelength management in optical transport networks, and to meet the need for in-network monitoring in both core and access networks. Through the combination of the respective DirectLight and MASS technologies, these new products are targeted at changing the economics of switching in network applications.

The new company will maintain its focus on service and product performance. Jeffrey Farmer, Continuum's CEO, explained the opportunity for its customers: "Both companies have built a solid reputation on providing high quality products and world-class support to its customers. This won't change going forward." He added, "This merger is a very natural fit, and will enable us to expand the range of solutions we can offer. We're already working on exciting new products, so keep your eyes open for new announcements in the coming months."

Both the new management team and Board of Directors will draw from the existing teams at Continuum and Polatis.