Elron Software To Acquire N.C.C. Ltd.

HAIFA, Israel--(BUSINESS WIRE)--Nov. 3, 1998--Elron Electronic Industries Ltd. (NASDAQ/ELRNF), a leading multinational high technology holding company, announced today that its wholly owned subsidiary, Elron Software Inc., has entered into an agreement for the purchase of substantially all of the assets and liabilities of N.C.C.- Network, Communications and Computer systems Ltd. The purchase price is $40 million in cash. An additional $4 million is to be paid after 3 years, subject to certain conditions.

N.C.C will operate through a new wholly owned subsidiary of Elron Software Inc., Elron Software (N.C.C) Ltd. Mr. Meir Alter, founder and controlling shareholder of N.C.C, will serve as the president of Elron Software (N.C.C) Ltd.

Completion of the transaction announced today is expected during December 1998 and is subject to the satisfaction of certain closing conditions including the receipt of third party and governmental consents.

Elron Software Inc. expects to record an extraordinary one-time charge to earnings in the fourth quarter of 1998 with respect to R&D in process; amount that the company currently estimates to be between $10-20 million.

With operations in Petah Tikva, Israel and Boston Mass., USA, N.C.C is a leader in the Internet/network management software and system integration segments of the IT market. Founded in 1983, the company has approximately 250 employees, including 200 software engineers. N.C.C customers include large U.S, Israeli and European service providers and technology companies in the telecommunications, data communications, and finance industries. Core competencies include: network management, Internet access, mission critical applications, secure messaging and Internet based home/corporate banking.

Dr. Jacov (Koby) Ben-Zvi, President and CEO of Elron Software Inc. called the agreement "a significant step" toward implementing Elron's strategy for growing its worldwide presence in the IT market. "The acquisition of N.C.C is highly synergistic with our existing Internet Product Division in Cambridge Massachusetts ," Dr. Ben-Zvi said, "and will enable Elron Software to provide a wide range of Internet/Network Management products, from off-the-shelf through enterprise to highly customized solutions for large network service providers". Elron Software's market-driven strategy is based upon acquiring Internet/Network Management products, customers and distribution channels and complemented by introducing innovative Israeli software products, utilizing existing channels and expertise. Commenting on the acquisition, N.C.C founder and CEO, Meir Alter, said, "We are pleased to become part of this dynamic and visionary company. N.C.C has capabilities to engineer high quality software for custom solutions, using Internet based technologies and Network Management products. Combined with Elron Software's expertise in marketing and distribution, this should be a source of significant competitive advantage as we move forward to provide strong support to our customers."

Elron Electronic Industries Ltd., is a multinational high technology holding company based in Israel. Through affiliates, Elron is engaged with a group of high technology operating companies  in the fields of medical diagnostic imaging, advanced defense electronics, communication, semiconductors, networking, software and information technology. 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.