Elron Announces Closing of Agreement to Sell All Its Holdings in Elbit Medical Imaging

Business Wire, May 4, 1999

HAIFA, Israel--(BUSINESS WIRE)--May 4, 1999--

Elron Electronic Industries Ltd. (NASDAQ:ELRNF), a leading multinational high technology holding company, announced the closing of the agreement to sell all its holdings in Elbit Medical Imaging Ltd. ("EMI" - NASDAQ:EMITF) to Europe Israel (M.M.S.) Ltd. (an Israeli public company traded on the Israeli stock market).

Elron sold 8,575,448 shares (representing approximately 37% of EMI stock on a fully diluted basis) and received today $127.8 million in addition to $17.2 million dividend received from EMI on April 13, 1999.

Elron will record, in the second quarter of 1999, a gain of approximately $20 million, net after tax.

As reported previously, following the buyer's request, Elron has granted to EMI a put option for 60 days under which, EMI can require Elron to purchase 50% of EMI's interest in EMI's Image Guided Therapy business for $2.5 million and a commitment by Elron to invest up to $10 million pari passu with EMI in their new venture.

Elron Electronic Industries Ltd. is a multinational high technology operative holding company based in Israel. Through affiliates, Elron is engaged with a group of high technology operating companies in the fields of advanced defense electronics, communication, semiconductors, medical, networking, information technology and Internet software and services. For further information, visit Elron at http://www.elron.com

Any statements in this press release that may be considered forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Actual results may differ from such forward-looking statements due to the risk factors discussed in periodic reports filed by the Company with the Securities and Exchange Commission which the Company urges investors to consider.