STOCKHOLM -- Transmode Systems AB and Lumentis AB, two of Europe's most successful private telecommunication companies, announced today that they will merge to create a new global force in Optical Networking. The companies, which are both headquartered in Stockholm, Sweden, will form a new company under the Transmode identity to further penetrate the growing Metro Wavelength Division Multiplexing (WDM) global equipment market.

Through the merger, which is effective immediately, Transmode has become a major supplier to telecommunications operators, MSOs, systems integrators, enterprises, utilities, public institutions and OEM partners world-wide. Over the past five years, both Transmode Systems and Lumentis have grown rapidly - the new organization has more than 100 customers globally and an established network of value-added resellers - and won several awards from the investment community as well as the telecommunications industry press.

The new Transmode brings a broad portfolio of Optical Networking solutions based on WDM to the market, designed to cater for the needs of Network Operators and Enterprises alike without compromising on functionality or cost-efficiency. Transmode's products address requirements from regional networks, through metro core and access networks, all the way down to the customer premises.

Isaac Olasoko, Transmode Systems' CEO who will also lead the new company, commented: "I am very excited about the prospects for the new Transmode. Customers of both companies will benefit from a greater choice of solution and dealing with an organization with global operational strength. Because the products of both companies are highly complementary, we will be able to serve both a broader base of customers, particularly opportunities with larger carriers, and a broader set of applications within those customers' networks."

Anders Lundberg, CEO of Lumentis, added: "Merging with Transmode is a natural step in the evolution of Lumentis' business. Together, we are building on the strong heritage of Optical technology expertise that Sweden is renowned for internationally. The combination of market opportunity, complementary products, geographical proximity and cultural compatibility created a compelling reason for our companies to come together".

The new organization also has considerable financial backing, with Transmode having closed a $15M financing round last December and Lumentis raising $9M in June 2004. The total investment to date in both companies is $81M, and existing investors Amadeus Capital Partners, POD Holding, HarbourVest, European Equity Partners, Chandaria, Santec, and the founders of both companies each own a share of the new Transmode.

Transmode Systems AB

Lumentis AB