July 28, 2008--The Pirelli Group (Milan, Italy) and CyOptics, Inc. (Lehigh Valley, PA) have announced the formation of a strategic alliance in integrated photonics. The combined business will be one of the strongest in the optoelectronics industry, bringing together an unparalleled set of technologies addressing the future needs of telecommunication networks.

The agreement foresees integration between PGT Photonics, the Pirelli Group's photonics company, valued at about US$40 million, including available cash, and CyOptics, a privately-held U.S. company specializing in optical components based on indium phosphide technology. As part of the agreement, Pirelli will participate in a CyOptics capital increase with a cash contribution of US$20 million.

The agreement combines the complementary technologies of CyOptics' expertise in indium-phosphide-based lasers and detectors, with PGT Photonics' substantial and broad investment in silicon-based photonics. Together the two companies will aggressively address products such as wavelength tunable optical subassemblies (TOSAs), photonic integrated circuits (PICs), and other components aimed at improving flexibility and reducing the cost of optoelectronic communications.

Following the transaction, Pirelli will maintain an approximately 30% share in the new business, which will have annual revenue of about $US 80 million.

Marco Tronchetti Provera, chairman of Pirelli, said, "This investment is coherent with Pirelli's strategy to grow in photonics through integration with other companies in similar businesses. We strongly believe in the potential of this transaction, which allows for joining two advanced and complementary technologies and creating a leading-edge company in the optical sector".

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Mon Jul 28 10:24:00 CDT 2008