MILAN, Italy and LEHIGH VALLEY, Pa. -- The Pirelli Group and CyOptics, Inc. announce 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 40 million dollars including available cash, and CyOptics, a privately-held US company which is a leader 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 20 million dollars.

The agreement combines the complementary technologies of CyOptics’ excellence 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 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 80 million dollars.

“This investment – Marco Tronchetti Provera, Chairman of Pirelli, said – 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”.

Pirelli SpA (Milan: PECI.MI)