TEL AVIV, Israel, Aug. 22 /PRNewswire-FirstCall/ -- ELSCINT LTD. today announced that following the previously announced merger negotiations with its principal shareholder, Elbit Medical Imaging Ltd. ("EMI"), it has signed a merger agreement with EMI, pursuant to which Elscint shall become a wholly owned subsidiary of EMI and its shares will no longer trade on the NYSE. The transaction was approved by the audit committee and board of directors of both EMI and Elscint.

Under the terms of the merger agreement, each ordinary share of Elscint (other than ordinary shares of Elscint held by EMI and Elscint) will be exchanged for 0.53 ordinary share of EMI. On June 7, 2005, the trading day in the United States immediately preceding the announcement of the proposed merger, the closing price for Elscint ordinary shares on the NYSE was $6.74 and the closing price for EMI ordinary shares on the NASDAQ was $19.37. On August 19, 2005, the last trading day in the United States immediately preceding the date of this news release, the closing price for Elscint ordinary shares on the NYSE was $8.77 and the closing price for EMI ordinary shares on the NASDAQ was $19.32.

The merger is to be performed in accordance with Sections 350 and 351 of the Israeli Companies Law, which require the approval of an Israeli District Court for consummation of the Merger. Accordingly, EMI and Elscint are expected to file a motion with the Tel Aviv District Court in the next few days.

The consummation of the merger is subject to certain conditions, including (1) the receipt of the approval of EMI and Elscint shareholders, (2) the receipt of a final court order from the Israeli court approving the Merger, (3) the declaration by the United States Securities and Exchange Commission (SEC) of the effectiveness of a registration statement on Form F-4 to be filed by EMI with respect to the ordinary shares of EMI to be issued in connection with the merger, and (4) the receipt of third party consents required for the Merger.

Mr. Abraham (Rami) Goren, Executive Chairman of Elscint, commented, "The merger is highly beneficial to the shareholders of Elscint, since it provides them liquidity of their holdings at a significant premium to the price level which prevailed in the last several years. The holding of EMI shares has the potential to further increase value for our shareholders. The combined company will have a depth of financial and other resources, which will enable it to position itself as a leading player in its various fields of operations."

About Elscint

Elscint Limited has interests in hotels in Western Europe, in hotel development projects principally in Western and Central Europe and in the Arena commercial and entertainment center in Israel.

About Elbit Medical Imaging Ltd.

EMI is a subsidiary of Europe Israel (M.M.S.) Ltd. and focuses on four main fields of operations: Commercial and Entertainment Malls through its subsidiary Plaza Centers (Europe) BV; the Hotel segment through its subsidiary Elscint Limited; Image guided treatment through InSightec - Image Guided Treatment Ltd.; and venture capital investments in the telecommunications business.

Important Legal Information

This press release does not constitute an offer of any securities for sale. Before making any voting or investment decision, investors are urged to read the joint proxy statement/prospectus regarding the proposed transaction and any other relevant documents carefully in their entirety when they become available because they would contain important information about the proposed transaction. Any final joint proxy statement/prospectus would be mailed to EMI's and Elscint's shareholders. The registration statement containing the joint proxy statement/prospectus and other documents would be available free of charge at the SEC's Internet site (http://www.sec.gov/).

EMI, Elscint and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of a proposed transaction. Information regarding EMI's directors and executive officers is available in EMI's Annual Report for the Fiscal Year Ended December 31, 2004, which was filed with the SEC on July 1, 2005. Information regarding Elscint's directors and executive officers is available in Elscint's Annual Report for the Fiscal Year Ended December 31, 2004, which was filed with the SEC on June 30, 2005 and as amended and filed with the SEC on July 14, 2005. Information regarding persons who may, under the rules of the SEC, be considered participants in a solicitation of EMI and Elscint shareholders in connection with a proposed transaction would be set forth in the joint proxy statement/prospectus when such joint proxy statement/prospectus is filed with the SEC.

Any forward looking statements with respect to Elscint's business, financial condition and results of operations included in this release are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward looking statements, including, but not limited to, product demand, pricing, market acceptance, changing economic conditions, risks in product and technology development and the effect of Elscint's accounting policies, risks related to the proposed merger of EMI and Elscint such as a failure to successfully integrate the two companies or realize the expected benefits from the proposed merger, as well as certain other risk factors which are detailed from time to time in EMI's filings with the Securities and Exchange Commission.

For Further Information: Company Contact Investor Contact Abraham (Rami) Goren Kathy Price Elscint, Ltd. The Global Consulting Group +972-3-608-6020 +212-983-1702, x212 argoren@elscint.netkprice@annemcbride.com

CONTACT: Company Contact - Abraham (Rami) Goren, Elscint, Ltd.,
+972-3-608-6020, argoren@elscint.net; Investor Contact - Kathy Price, The
Global Consulting Group, +1-212-983-1702, x212, kprice@annemcbride.com