Alcatel Optronics to acquire Kymata Ltd., strengthens hold on active and passive optical components

July 30, 2001--Alcatel Optronics, a provider of optoelectronic components for telecommunications systems, announced it will acquire privately held Kymata Ltd., a deal worth approximately Euro 134 million.

Alcatel Optronics (Paris: CGO and NASDAQ: ALAO), a provider of optoelectronic components for telecommunications systems, announced it has agreed to acquire privately held Kymata Ltd. Kymata is a player in planar technology for high-end passive optical network components, representing the majority of the fast growing Dense Wavelength Division Multiplexing (DWDM) market.

Under the terms of the agreement, 9.0 million Alcatel Class O shares and 2.2 million Alcatel Class A shares will be exchanged for all outstanding shares of Kymata. Based on the closing price in Paris on July 27, 2001, the transaction has an implied value of Euro 134 million.

Kymata produces Arrayed Waveguide Gratings (AWGs) multiplexer/demultiplexers, the first commercially available devices using planar processes. AWG is considered to be one a leading technology for the metropolitan optical network market, one of the fastest growing markets in the telecommunication industry and a strategic target for Alcatel Optronics. This acquisition also demonstrates Alcatel Optronics' strategy to be a major player in the integration of active and passive optical components by strengthening its planar waveguide expertise as well as its passive component product lines.

A private company founded in 1998, Kymata has established itself in the planar passive optical components market. Kymata's families of planar optical components (e.g., AWG) claim to offer benefits over discrete optical components, providing greater functionality in a compact form. These components are essentially used as building blocks to create integrated optical modules and sub-systems (e.g. Optical Power Monitor) necessary for DWDM systems.

Kymata offers the following solutions:

* Planar multiplexing and demultiplexing

* Dynamic signal conditioning

* MEMS designing and prototyping services

* Planar design software and design services

* Optical add/drop multiplexing

Kymata's products, which are already calibrated and include integrated devices on a single chip and electronic subsystems, provide building blocks for higher functionality, integrated optical modules and sub-systems required to support the explosive growth in optical telecommunications.

Kymata's technologies are Arrayed Wave Guide Gratings (AWG) and Micro-Electro Mechanical Systems (MEMS) which are based on Silicon and Silica-on-Silicon processes.

In 2000, Kymata bolstered its optical design capabilities by acquiring BBV Design and Software based in The Netherlands. With this acquisition, Kymata gained expertise in optical planar device design and simulation tools for integrated optic device manufacturers. In addition, Kymata acquired Total Micro Products (TMP), also based in The Netherlands. TMP is a Micro-Electro Mechanical Systems (MEMS) facility providing design, fast-track prototyping manufacturing services (ISO 9001 certified) for customers in the opto-electronics and industrial instrumentation industries.

Kymata's headquarters are located in the heart of "Silicon Glen", Scotland, UK a center for opto-electronics and other technologies. Kymata has offices in six locations worldwide and 407 employees.

Planar technology

Planar technology is based on creating optical waveguides on substrates. One strong advantage of planar waveguide technology is that it can be manufactured using similar processes as those used for semiconductor manufacturing. This leads to highly reproducible performance, resulting in greater manufacturing yields and cost-effectiveness. In addition, planar waveguide technology enables passive devices to be integrated with active devices, such as lasers and detectors. Initially, planar devices can be used to create DWDM AWG multiplexers/demultiplexers, variable optical attenuators, true optical switches, and optical add/drop multiplexers -- all on one chip. Eventually as processes for combining hybrid elements develop, it may be possible to have active and passive solutions on one device.

Arrayed Waveguide Gratings technology

AWGs are used for managing DWDM signals. A multiplexer is used to combine all the wavelengths at the beginning of a DWDM route onto one fiber. A demultiplexer is used at the other end to separate out the various wavelengths. Basically each of the arms (or waves) of the waveguide has a slightly different length and this creates interference patterns that allow the separation of the wavelengths at the other end.

The transaction is subject to various closing conditions and is expected to close by end of August.

About Alcatel Optronics:

Alcatel Optronics designs, manufactures and sells high performance optical components, modules and integrated sub-systems for use in terrestrial and submarine optical telecommunications networks. For more information, visit www.alcatel.com/optronics.

About Alcatel:

Alcatel builds next generation networks, delivering integrated end-to-end voice and data networking solutions to established and new carriers, as well as enterprises and consumers worldwide. For more information, visit www.alcatel.com.

About Kymata:

Founded in 1998, Kymata Ltd. provides next-generation planar and microelectromechanical systems-based integrated optical components for the networking industry. The company is dedicated to designing, fabricating, packaging and automated testing of components and sub-system level solutions to meet the high volume challenges facing the DWDM communications industry. For more information, visit www.Kymata.com.

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