July 29, 2005 Billerica, MA, and Cambridge, UK -- Optical switch vendors Continuum Photonics Inc. and Polatis Ltd. have agreed to merge under an as-yet undisclosed name. The two firms, both of which offer products based on piezo-electric beam steering, will combine additional cash as well as current investors and product lines on the merger's expected completion date of August 15.

According to Aaron Bent, Continuum's vice president of marketing, the two companies may have similar base technologies, but they've done different, albeit complementary things with them. Continuum Photonics, founded in 1998, has focused on the optical automation systems market, which entails making test labs more efficient. The company pairs its switching skills with gain equalization and power monitoring capabilities under the DirectLight name. Polatis, founded in 2000, has enjoyed its greatest success in the defense market. Its Micro-Actuation and Sensing System (MASS) platform creates a very stable device that can switch dark fiber, Bent says.

The combined companies will offer switching products for the test and measurement, defense, video, network test and monitoring, and transport markets. Bent reveals that new products for this last category should debut this September at ECOC in Glasgow, Scotland. The products will address network monitoring and wavelength management, with the latter possibly competing with wavelength blockers and two-dimensional MEMS devices for a place within reconfigurable optical add/drop multiplexers (ROADMs).

The two companies will contribute a significant amount of cash to the new firm, although Bent declined to estimate how much. Continuum closed a $17.5 million round in April 2004, while Polatis received $9.4 million in third-round financing last November. The two companies' existing investors are expected to kick in a few more dollars as well. 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 is supported by 3i, Alta Berkeley, Prelude, and EonTech.

The new company will retain offices and manufacturing facilities in the United States and the UK. Bent says it is likely products sold in the North American market will be manufactured in the United States, with the UK facility servicing European orders. Bent says that the usual reduction of redundant positions should occur, particularly at the management level. He declined to speculate who would occupy the top management spots on August 15.

-- S. Hardy