ECI Telecom to go private for $1.2 billion in cash

July 2, 2007
JULY 2, 2007 -- ECI Telecom Ltd. says it has entered into a definitive merger agreement for the company to be acquired by affiliates of the Swarth Group, an investment vehicle controlled by Shaul Shani, and certain funds that have appointed Ashmore Investment Management Ltd. as their investment manager.

JULY 2, 2007 -- ECI Telecom Ltd. (search for ECI Telecom) says it has entered into a definitive merger agreement for the company to be acquired by affiliates of the Swarth Group, an investment vehicle controlled by Shaul Shani, and certain funds that have appointed Ashmore Investment Management Ltd. as their investment manager in a transaction valued at approximately $1.2 billion.

Under the terms of the agreement, ECI shareholders will receive $10 per share in cash at closing, representing a premium of approximately 22% over ECI's average closing share price during the 30 trading days ended June 15, 2007. The company confirmed it was in discussions with third parties regarding a possible transaction on June 17, 2007. There is no financing condition to the obligations of the buyers to consummate the transaction.

The board of directors of ECI approved the agreement and recommended that ECI shareholders vote in favor of the transaction. The closing of the transaction is subject to shareholder approval, certain regulatory approvals, and other customary closing conditions. It is currently anticipated that the transaction will be consummated by the end of the year. Upon the closing of the transaction, ECI ordinary shares would no longer be traded on NASDAQ.

Koor Industries, Clal Industries & Investments, and a group led by Carmel Ventures, collectively the owners of an aggregate of approximately 44% of ECI's outstanding ordinary shares, have entered into voting undertakings with the buyers under which they have agreed to vote their shares in favor of the transaction. These undertakings will terminate if the board of directors of ECI changes its recommendation in favor of the proposed transaction with the current buyers.

Under the terms of the agreement, ECI may actively solicit alternative proposals from third parties until July 31, 2007 and intends to consider any such proposals with the assistance of its independent advisors. ECI does not intend to disclose developments with respect to this solicitation process unless and until its board has made a decision regarding any alternative proposals. ECI advises that there can be no assurance that the solicitation of superior proposals will result in an alternative transaction. In addition, ECI may, at any time, subject to the terms of the merger agreement, respond to unsolicited proposals. If the company accepts a superior proposal, a break-up fee would be payable by the company to the buyers.

Shlomo Dovrat, chairman of the board of directors of ECI Telecom, commented, "Our focus, as a board, has always been to maximize long-term shareholder value. In the last few years ECI was able to emerge from the telecom crisis as a vibrant successful company growing its market share in a highly competitive market. At the board we evaluated our strategy going forward and while excited with the opportunities we also recognized the challenges of continuing the path as an independent public company operating in a competitive and consolidating market. After careful and thorough analysis, and with the completion of extensive negotiations with the buyers, the board of directors has decided to endorse this transaction as being in the best interest of our shareholders and recommends that it is approved by the shareholders. We believe that this transaction recognizes the value of ECI's strong market position and innovative solutions, while providing our shareholders with an attractive cash offer. We have high regards for the investor group and are confident ECI will continue to thrive under its new ownership structure."

Rafi Maor, president and CEO of ECI Telecom, added, "We are excited about the opportunity this acquisition presents for our shareholders, customers, employees, and partners. As a well-backed private company, we believe that ECI will have greater flexibility to focus on its long-term strategy to be a leading provider of innovative next-generation network infrastructure solutions. Our customer focus, innovation, and responsiveness, for which we are well known today, will be further enhanced. The Swarth Group and Ashmore have in-depth knowledge and vast experience in the telecom industry and will be a great asset as we continue to grow the company. I feel that this investment in ECI serves as a testament to our strong market position and products as well as the talent of our people. As we move from a public to a private company, I remain committed to the company and its long-term growth strategy. I look forward to cooperating with Shaul Shani and the other members of the buyer group to complete the transaction and continue working with ECI's management team on moving ECI forward. Our success is driven by the hard work, commitment, and dedication of our capable employees around the world and I thank them for their invaluable contribution to ECI."

Shaul Shani of the Swarth Group commented on behalf of the buyer group, saying, "The Swarth Group and Ashmore welcome the opportunity to become part of ECI and have great appreciation for its talented people and leading technology. Both firms are committed investors that will bring to ECI extensive industry expertise as well as dedication to meeting ECI's long term growth outlook."

Goldman, Sachs & Co. served as exclusive financial advisor to ECI, and Skadden, Arps, Slate, Meagher & Flom LLP and Goldfarb, Levy, Eran, Meiri & Co. served as its legal counsel. Credit Suisse served as financial advisor to the buyer group. Clifford Chance US LLP, Allen & Overy LLP, Yossi Avraham, Arad & Co., and Meitar Liquornik Geva & Leshem Brandwein served as legal counsel to the buyer group.

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