August 21, 2008

CIG and TXP to Merge

TXP and Cambridge Industry Group (CIG), a privately held, leading R&D and OEM supplier of FTTH (fiber-to-the-home) Customer Premise Equipment (CPE) based in Shanghai, China, announced today that they have signed a Memorandum of Understanding (MoU) to merge the two companies.

The merger brings together two leading independent suppliers of Passive Optical Network (PON) Optical Network Terminal (ONT) solutions to form the world’s largest ODM and services business focused on FTTH CPE.

The combined company would have the industry’s widest family of ONT solutions, supporting a broad array of both indoor and outdoor PON ONTs as well as residential gateways for the worldwide market. Furthermore, the consolidation of R&D and customer service resources will give the combined company an enhanced capability to better serve its global customer base while continuing to develop next generation FTTH CPE products.

In addition, the merger is expected to allow the combined company to enter a new phase of cost leadership in the highly competitive FTTH access market, supporting the transition to aggregated supply of GPON CPE.

With complementary product suites and customer bases, the deal doubles the customer count for GPON ONTs over that of each individual company, making CIG-TXP the number one independent supplier of GPON ONTs in the world. The merger will enable the combined company to leverage manufacturing volumes and yield savings through consolidation of its supply chain in China. The combination will also be better equipped to support sales, marketing and customer service efforts around the world.

“Together, CIG and TXP are better equipped to address the total needs of our global base of customers for GPON access,” says Michael C. Shores, President and Chief Executive Officer of TXP.

Gerald G. Wong, CEO of Cambridge Industries Group notes, “A combined company brings a new independent supplier of GPON ONTs to market that is capable of delivering carrier-class products at CPE pricing levels.” He adds, “Together, our two companies will be able to offer the most advanced ONTs in the industry, interoperable with more carriers than any other provider, and at extremely compelling price points, while still maintaining sufficient margins to ensure sustained profitability and maximum value for shareholders.”

TXP generated approximately $11.0 million in revenue in 2007, up from $8.2 million in 2006. CIG generated approximately $10.2 million in revenue in 2007, up from $1.9 million in 2006. The merger is expected to close before year-end.

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