EXHIBIT 99(b)(9) ================================================================================ Presentation to the Special Committee Regarding Project Alpha August 18, 1999 [LOGO] Merrill Lynch Table of Contents ================================================================================ 1. Offer by Discount Investment Corporation 2. Valuation o Summary o Premiums and Discounts o Public Market Overview 3. Exhibits - ------------------------------------------------------------[LOGO] Merrill Lynch 2 ================================================================================ Offer by Discount Investment Corporation ================================================================================ Offer by Discount Investment Corporation ================================================================================ IDB Group Structure --------------------------- IDB Holding Corporation --------------------------- | --------------------------- | | --------------- --------------- IDB Development Israel Discount Corporation Bank --------------- --------------- | ---------------- | 71.7% | 61.1% | | ------------ ------------ Discount Clal Investment (Israel) Corporation ------------ ------------ | | 81.4% ------------ PEC Israel Economic Corporation ------------ o IDB Development Corporation ("IDB") is a controlling shareholder of Discount Investment Corporation ("DIC") o On January 7, 1999, DIC acquired 81.4% of PEC Israel Economic Corporation ("PEC") from IDB by way of an exchange of shares (IDB received 1.1642 shares of DIC for each share of PEC with the total market value as of that date of approximately $498 million) and from that date PEC has become a subsidiary of DIC o PEC and DIC, historically sister companies, hold a diversified portfolio of equity investments in Israeli companies o PEC and DIC have numerous cross shareholdings in Israeli public and private companies as a result of their co-investment strategy o IDB intends to rationalise its holdings by taking PEC private and merging it into a 100% subsidiary of DIC - ------------------------------------------------------------[LOGO] Merrill Lynch 4 Offer by Discount Investment Corporation ================================================================================ o The cash offer for all outstanding shares of PEC not already owned by IDB or its affiliates is announced by IDB on September 8, 1998 o Board of Directors of DIC approves an exchange of 81.35% of PEC shares owned by IDB for newly issued shares of DIC on October 15, 1998. The exchange is effected as of January 7, 1999 o Acquisition of at least 8.65% of total outstanding shares will allow IDB to effect a Short-Form merger ------------------------------------------------------------------- Summmary of Financial Terms(1) ------------------------------------------------------------------- December 11, 1998 August 18, 1999 ----------------- --------------- Cash Offer (per share)(2) $30.00 $36.50 % Increase from original offer ($25.50) 18% 43% Premium/(Discount) to market price: - One day before the offer(3) 32% 25% - One week before the offer(4) 28% 29% - One month before the offer(5) 20% 21% - 52-week high(6) 13% 7% - 52-week low(7) 50% 60% - Premium to 3-month average of $21.02 prior to (03/25/98)(8) 43% 74% Implied Company Value(9) $551m $670m Implied Offer Value (assumes 100% acceptance) $103m $125m ------------------------------------------------------------------- (1) Stock Prices from Bloomberg. (2) The offer as of 08/18/99 is at an approximately 21% premium to the offer as of 12/11/98. (3) Percentage change one day before the offer for trading dates ended 09/04/98 and 08/17/99, respectively. (4) Percentage change one week before the offer for trading dates ended 09/01/98 and 08/10/99, respectively. (5) Percentage change one month before the offer for trading dates ended 08/07/98 and 07/20/99, respectively. (6) Percentage change for 52-week high of $26.50 on 09/18/98 and $34.25 on 06/21/99, respectively. (7) Percentage change for 52-week low of $19.94 on 01/22/94 and $22.75 on 09/03/98, respectively. (8) On 3/25/98, IDB Holdings announced an acquisition of 9.5% of PEC in the public market at a price of $25.50. Simultaneously, IDB indicated its intention to acquire the remaining shares of PEC. (9) Implied company value based on $30.00 and $36.50 a share, respectively. - ------------------------------------------------------------[LOGO] Merrill Lynch 5 ================================================================================ Valuation ================================================================================ Summary ================================================================================ Methodology - -------------------------------------------------------------------------------- PEC Economic Corporation Net Asset Value Analysis(1) Investment Portfolio - ----------------------------------------------------------------------------------------------------------------------------------- 7 Public 3 Private Other Valuation Methodology Key Analyses Companies Companies Holdings (3) - ----------------------------------------------------------------------------------------------------------------------------------- Analysis of research coverage |_| Opinion of analysis (PEC overall & key holdings) X X |_| Valuation/target values Analysis of public market prices |_| Current Prices X X(2) |_| 52 week high/low Analysis of publicly traded |_| Current trading valuations for relevant peer comparables group |_| Review of trading values as a multiple of past/ X X projected results Analysis of acquisition transactions for |_| Analysis of pricing of relevant transtactions X X comparable companies |_| Review of multiples paid Analysis of equity transactions in |_| Valuation achieved in recent transcations X X respective companies (DCF analysis) (4) |_| Projections of financial performance |_| Present values of projected cash flows - Explicit projections - Terminal value Historical cost/carrying value |_| Determination of cost/carrying values of investments |_| Unrealized capital gains |_| Liquidation value analysis X X X =================================================================================================================================== - ----------------------------------------------------------------------------------------------------------------------------------- Market Discounts for comparable |_| US and Emerging Markets closed end fund companies discounts to NAV |_| Discounts to NAV of Isreaeli Holding companies Market Premiums pain in comparable |_| Analysis of minority "buyouts" in "going acquisistion transcations private" transactions |_| Consider control premiums as appropriate =================================================================================================================================== (1) In addition to performing NAV analysis of PEC's holdings, Merrill Lynch analyzed major assets and liabilities on the holding company level. (2) For public companies. (3) Includes public and private holdings. (4) Merrill Lynch has been informed by PEC that it did not possess and could not provide access to current financial forecasts for any of the companies in PEC's investment portfolio. Therefore, we have not been able to conduct the DCF analyses. - -----------------------------------------------------------[LOGO] Merrill Lynch 8 Summary - -------------------------------------------------------------------------------- Most Significant Direct Holdings - ----------------------------------------------------------------------------------------------------------------------------- PEC Israel Economic Discount Investment IDB(1) Corporation Corporation Holdings ------------------- ------------------- ------------- % of Equity % of Equity % of Equity - ----------------------------------------------------------------------------------------------------------------------------- Private Companies |_| Cellcom Israel 12.5% 12.5% 25.0% |_| Tevel Israel International Communication 23.7% 24.8% 48.5% |_| El-Yam Ships and Holdings 10.1% 14.3% 24.4% Public Companies |_| Property and Building Corporation 41.6% 15.2% 56.8% |_| Super-Sol(2) 20.1% 24.9% 46.6% |_| Elron Electronics Industries 14.5% 28.2% 42.7% |_| Gilat Satellite Networks 3.7% 0.9% 4.6% |_| Tambour (3) 43.3% 42.3% 86.8% |_| Scitex Corporation 6.6% 6.6% 26.2% |_| United Pan European Communications 0.6% 0.6% 1.2% ============================================================================================================================ Source: PEC Israel Economic Corporation (1) Includes total holdings of PEC Israel Economic Corporation, IDB Holding and their affiliates. (2) Includes the proportionate interest of IDB Group by the ownership of Super-Sol held by subsidiaries of Super-Sol. (3) Includes the proportionate interest of IDB Group by the ownership of Tambour held by subsidiaries of Tambour. - -----------------------------------------------------------[LOGO] Merrill Lynch 9 Summary - -------------------------------------------------------------------------------- Assumptions |_| All public market share prices as of Monday, August 16, 1999 |_| Share ownership in different companies as provided by PEC management and SEC filings |_| 1999 projections based on discussions and correspondence with management and Merrill Lynch estimates or obtained from equity research reports |_| Net debt estimates as of last publicly available financial statements |_| Effective tax rate on estimated gains assumed at 25.0% for all companies |_| Exchange rate used: US$1.00 = NIS 4.20 as of August 16, 1999 |_| Outstanding shares of PEC: 18,362,188 - -----------------------------------------------------------[LOGO] Merrill Lynch 10 Summary ================================================================================ Estimated Value as of August 18, 1999 --------------------- ----------------------- -------------------------- Value of Value of PEC Estimated Contribution per PEC's Interest Share(1) Share as a % of Total --------------------- ----------------------- -------------------------- High Low High Low High Low --------------------- ----------------------- -------------------------- Large Public Holdings $560 $475 $30.50 $25.87 47.1% 46.3% Large Private Holdings $495 $417 $26.96 $22.71 41.6% 40.6% Total Other Public Holdings (2) $ 84 $4.56 7.0% 8.2% Total Other Private Holdings $ 50 $2.70 4.2% 4.8% Other Net Assets (3) $ 1 $0.07 0.1% 0.1% ------------------------ ------------------------ -------- ------- Total Pre-Tax Value of PEC Holdings $1,190 $1,027 $64.79 $55.91 100.0% 100.0% ======== ======= Less Taxes (4) $234 $193 $12.73 $10.51 ---- ---- ------ ------ Sub-Total $956 $834 $52.06 $45.41 ---- ---- ------ ------ Less: Closed End Fund Discount 25.00% Estimated Value $717 $625 $39.05 $34.06 ---- ---- ------ ------ (1) Assumes 18,352,188 PEC shares outstanding. (2) Assumes share prices as of August 25, 1995. (3) Net debt plus outstanding loan to Celleron plus other assets and liabilities of PEC Israel. (4) Assumes 25.0% effective tax rate on estimated gains for all companies. - -----------------------------------------------------------[LOGO] Merrill Lynch 11 Summary ================================================================================ Sensitivity Analysis |_| 5.0% increase in effective tax rate on estimated gains results in approximately $1.91 (at the top end of the range) and $1.58 (at the bottom end of the range) reduction in valuation per share of PEC |_| 5.0% increase in closed-end fund market discount to NAV results in approximately $2.60 (at the top end of the range) and $2.27 (at the bottom end of the range) reduction in valuation per share of PEC |_| $500 million increase in valuation of Cellcom results in approximately $1.93 increase in valuation per share PEC - -----------------------------------------------------------[LOGO] Merrill Lynch 12 ================================================================================ Premiums and Discounts ================================================================================ Premiums and Discounts ================================================================================ Analysis of Premiums in "Going Private" Transactions |_| Reviewed completed "going private" transactions in the range of $100-$500 million from 1995 to the present -------------------------------------------------------------------- Offer Price as a Premium/(Discount) to Target Share Price at Indicated Period Prior to Announcement -------------------------------------------------------------------- 1 Day 1 Week 1 Month -------------- -------------- -------------- Maximum 63.9% 78.9% 88.2% Mean 24.2% 28.2% 33.6% Median 21.8% 23.9% 28.1% Minimum (6.1%) (10.3%) (2.7%) -------------------------------------------------------------------- |_| Reviewed completed "going private" transactions in which less than 25.0% shareholdings were acquired -------------------------------------------------------------------- Offer Price as a Premium/(Discount) to Target Share Price at Indicated Period Prior to Announcement -------------------------------------------------------------------- 1 Day 1 Week 1 Month -------------- -------------- -------------- Maximum 52.0% 50.0% 77.8% Mean 19.7% 23.7% 30.0% Median 11.3% 25.5% 28.1% Minimum (6.1%) 1.7% 3.6% -------------------------------------------------------------------- Source: SDC database, August 1999 - -----------------------------------------------------------[LOGO] Merrill Lynch 14 Premiums and Discounts ================================================================================ Holding Company/Closed-End Fund Discounts -------------------------------------------------------------- Appropriate holding company discount is approximately 25.0% or possibly higher in the case of Israeli holding companies -------------------------------------------------------------- |_| Morgan Stanley Emerging Markets Fund (MSF) is currently trading at a (21.26%) discount to its NAV(1) |_| Foreign and Colonial Emerging Middle East Fund (EME) is currently trading at a (19.06%) discount to its NAV (2) |_| First Israel Fund (ISL) is trading at a (14.12%) discount to its NAV(1) |_| Koor Industries is trading at a (25.40%) discount to its NAV(3) |_| Ampal-American Israel Corporation is trading at a (34.00%) discount to its NAV(4) (1) Merrill Lynch Mutual Fund database as of August 13, 1999. (2) Merrill Lynch Mutual Fund database as of August 6, 1999. (3) Merrill Lynch equity research as of May 25, 1999. (4) Lehman Brothers equity research as of March, 1999. - -----------------------------------------------------------[LOGO] Merrill Lynch 15 Premiums and Discounts ================================================================================ PEC Historical Discounts (1) - -------------------------------------------------------------------------------------------------------- Investment Equity Analyst Bank Report Date Estimated Pre-Tax NAV per Share Share Price Discount to NAV - -------------------------------------------------------------------------------------------------------- Lehman Brothers 12/03/98 $46.76 $24.560 (40.3%) Lehman Brothers 11/19/98 45.10 24.250 (46.2) Lehman Brothers 05/26/98 51.94 22.688 (56.3) Lehman Brothers 03/27/98 51.10 23.063 (54.9) Lehman Brothers 12/05/97 35.29 Conservative 22.188 (37.1) 38.16 Aggressive 22.188 (41.9) Lehman Brothers 11/19/97 35.29 Conservative 19.063 (46.0) 38.16 Aggressive 19.063 (50.0) Smith Barney 11/18/97 34.47 19.375 (43.8) Lehman Brothers 09/12/97 36.41 Conservative 20.625 (43.4) 39.28 Aggressive 20.625 (47.5) Smith Barney 09/03/97 34.15 20.625 (39.6) Lehman Brothers 06/24/97 36.68 Conservative 23.625 (35.6) 38.59 Aggressive 23.625 (38.8) Smith Barney 04/09/97 28.03 19.000 (32.2) Lehman Brothers 09/04/96 23.03 Conservative 18.375 (20.2) 24.56 Aggressive 18.375 (25.2) - -------------------------------------------------------------------------------------------------------- Source: Publicly distributed research reports (1) Research analysts valued the PEC's NAV under both aggressive and conservative scenarios - ------------------------------------------------------------[LOGO] Merrill Lynch 16 ================================================================================ Public Market Overview ================================================================================ Public Market Overview ================================================================================ January 1997 to Present (1) - -------------------------------------------------------------------------------- Daily Stock Price Performance - -------------------------------------------------------------------------------- ----------------------------------- March 23, 1998 ----------------------------------- IDB Holdings acquired 9.5% of PEC's outstanding shares ----------------------------------- ----------------------------------- December 17, 1998 ----------------------------------- IDB offers $30.00 per share to Minority shareholders ----------------------------------- PEC Stock Price (US$) [GRAPHIC OMITTED] Volume [GRAPHIC OMITTED] (1) As of August 1999. - ------------------------------------------------------------[LOGO] Merrill Lynch 18 Public Market Overview ================================================================================ Share Price Performance Since the IDB Offer Announcement on September 8, 1998 [GRAPHIC OMITTED] - -------------------------------------------------------------------------------------------- % Change Companies 9/8/98(2) 12/9/98(2) 8/16/99(2) 9/8/98-4/16/99 - -------------------------------------------------------------------------------------------- PEC Israel Economic Corporation $25.00 $24.56 $29.06 16.3% Elron Electronic Industries $14.48 $15.36 $23.62 58.6% Tambour $1.30 $1.30 $1.74 33.8% Gilat Satellite Networks $37.13 $56.25 $48.06 29.5% Property and Building Corporations $89.33 $78.72 $100.28 12.7% Super-Sol $2.67 $2.37 $2.62 (8.7%) Scitex Corporation $11.00 $10.29 $9.25 (15.9%) - -------------------------------------------------------------------------------------------- (1) Share prices in local currency; PEC Israel Economic Corporation, Scitex Corporation and Gilat Satellite Networks quoted in U.S. dollars. (2) Assumes exchange rate of NIS/US$ of 3.85, 4.18 and 4.10 on September 8, 1998, December 9, 1998 and August 16, 1999, respectively. - ------------------------------------------------------------[LOGO] Merrill Lynch 19 ================================================================================ Exhibits ================================================================================ ================================================================================ Private Holdings ================================================================================ Private Holdings ================================================================================ Cellcom Israel --------------- ------------------ ------------- Total Company PEC's % Interests PEC's Value Valuation Range Valuation Range(6) Per Share(7) --------------- ------------------ ------------- Comparable Company Analysis Enterprise Value/1998A EBITDA(1) $3,148-$2,658 $394-$332 $21.43-$18.09 Enterprise Value/1999E EBITDA(2) $2,686-$2,190 $336-$274 $18.29-$14.91 Enterprise Value per Subscriber(3) $2,583-$1,958 $323-$245 $17.58-$13.33 Enterprise Value/1998A EBITDA Growth(4) $2,658-$2,167 $332-$271 $18.09-$14.75 Enterprise Value/1999E EBITDA Growth(5) $2,412-$1,676 $302-$210 $16.42-$11.41 --------------- ------------------ ------------- Valuation Range $2,750-$2,250 $343-$281 $18.72-$15.32 --------------- ------------------ ------------- (1) Based on Enterprise Value/1998A EBITDA multiple range of 13.0x-15.0x. (2) Based on Enterprise Value/1999E EBITDA multiple range of 11.0x-13.0x. Assumes half-year 1999 EBITDA is annualized to reflect a full year figure. (3) Based on Enterprise Value of $2,000.0-$2,500.0 per subscriber. (4) Based on Enterprise Value/1998A EBITDA/growth rate multiple of 1.0-1.3. Assumes Cellcom Israel EBITDA projected growth rate of 10%. (5) Based on Enterprise Value/1999E EBITDA/growth rate multiple of 0.9-1.2. Assumes half-year 1999 EBITDA is annualized to reflect a full year figure. Assumes Cellcom Israel EBITDA projected growth rate of 10%. (6) Assumes PEC Israel Economic Corporation owns 12.5% of Cellcom Israel. (7) Assumes 18,362,188 shares outstanding. - ------------------------------------------------------------[LOGO] Merrill Lynch 22 Private Holdings ================================================================================ Tevel Israel International Communication --------------- ------------------ ------------ Total Company PEC's % Interests PEC's Value Valuation Range Valuation Range(7) Per Share(8) --------------- ------------------ ------------ Matav Comparable Company Analysis Enterprise Value per Subscriber(1) $629 $149 $8.12 Enterprise Value/1998 EBITDA(2) $459 $109 $5.92 Adjusted Enterprise Value per Subscriber(3) $237 $56 $3.06 Adjusted Enterprise Value/1998 EBITDA(4) $144 $34 $1.86 Comparable Acquisition Analysis Transaction Value per Subscriber in Gvanim Acquisition(5) $368 $87 $4.75 Transaction Value in TCI's Acquisition(6) $285 $68 $3.68 --------------- ------------------ ------------ Valuation Range $464-$421 $110-$100 $5.99-$5.45 --------------- ------------------ ------------ (1) Based on Matav's Enterprise Value per Subscriber of $1,218. (2) Based on Matav's Enterprise Value/1998 EBITDA multiple of 9.7x. (3) Based on Matav's Adjusted Enterprise Value per Subscriber of $2,199. Adjustment is made for stakes in Baraq and Partner valued at $270m per June 1999 Warburg Dillon Read estimate. (4) Based on Matav's Adjusted Enterprise Value/1998 EBITDA multiple of 5.4x. Adjustment is made for stakes in Baraq and Partner valued at $270m per June 1999 Warburg Dillon Read estimate. (5) Based on $223 million acquisition of Gvanim (144,000 subscribers). (6) Based on the acquisition of 23% of Tevel by UPC from TCI for a consideration of $85.0 million. (7) Assumes PEC Israel Economic Corporation owns 23.7% of Tevel Israel International Communication. (8) Assumes 18,362,188 shares outstanding. - ------------------------------------------------------------[LOGO] Merrill Lynch 23 Private Holdings ================================================================================ El-Yam Ships and Holdings(1) ------------------ ------------------ ------------ Total Company PEC's % Interests PEC's Value Valuation Range(6) Valuation Range(6) Per Share(7) ------------------ ------------------ ------------ Market Value of IDB Holdings by El-Yam Ships and Holdings Today's Value (8/16/99)(2) $384 $39 $2.11 90 Day Average(2) $391 $40 $2.15 Market Value of Shipping Business(3) Est. value of ships/resale basis Approx. value of outstanding business $0 $0 $0.00 Recent Block Trades of IDB Holdings 9.5% transaction with Goldman Sachs(4) $306 $31 $1.69 3.5% sale by DIC(5) $309 $31 $1.70 ------------------ ------------------ ------------ Valuation Range $430-$370 $41-$37 $2.23-$2.02 ------------------ ------------------ ------------ (1) Assumes exchange rate of (NIS/US$) 4.20. (2) Information from Bloomberg. Assumes 37.67 million shares outstanding. (3) Assumes value of shipping business is fully offset by liabilities (as represented by management). (4) In February of 1998, Goldman Sachs and related entities bought 9.5% of IDB Holding's outstanding shares. (5) In April of 1998, DIC sold 3.5% of IDB Holding's outstanding shares. (6) Assumes PEC Israel Economic Corporation owns 10.1% of EL-Yam Ships and Holdings. EL-Yam Ships owns substantially all of the equity in El-Yam Holdings, which in turn owns 37.1% in IDB Holdings. (7) Assumes 18,362,188 shares outstanding. - ------------------------------------------------------------[LOGO] Merrill Lynch 24 Private Holdings ================================================================================ El-Yam Ships and Holdings - -------------------------------------------------------------------------------- Daily Stock Price Performance - -------------------------------------------------------------------------------- ---------------------------------- IDB Holding Corporation(1) ---------------------------------- 8/16/99 $27.44 30 Day Avg. $27.83 90 Day Avg. $28.00 1 Year Avg. $23.06 ---------------------------------- IDB Stock Price (US$) [GRAPHIC OMITTED] Source: Datastream, August 1999 (1) Assumes exchange rate of (NIS/US$)4.20. - ------------------------------------------------------------[LOGO] Merrill Lynch 25 Private Holdings ================================================================================ Other Private Holdings (Dollars in thousands, except per share data) - ---------------------------------------------------------------------------------------------- Estimated PEC's PEC's Carrying Holdings Other Private Holdings Ownership Cost Value Value(7) - ---------------------------------------------------------------------------------------------- Advent Israel Limited Partnership 5.4% 699 703 703 Aerogen 1.9% 879 400 879 Aviv Giladi 12.5% 1,261 1,261 1,261 Combact Diagnostic 2.3% 1,685 1,685 1,685 CosmoCom 4.7% 1,000 1,000 1,000 DEP (RDC) 16.7% 6,993 3,178 6,993 E,D,S,L Communications Ltd 6.7% 600 600 600 El Rad Analytical(1) 2.7% 1,001 1,001 4,000 Gemini Cap. Management 25.0% 146 0 146 Gemini Israel Fund L.P. 16.0% 5,194 5,141 5,194 Gemini Israel II LP 3.8% 836 719 836 General Engineers Limited(2) 100.0% 1,381 2,947 2,947 Given Imaging 3.3% 928 909 928 Global Village Telecom 5.4% 1,438 1,438 1,438 HTC Ltd 4.9% 1,264 1,264 1,264 Ken Software 9.2% 1,544 1,544 1,544 Mondex Israel/Mondex Services(3) 25.0% 3,395 0 0 New Check 6.3% 2,500 2,500 2,500 Orbital 1.3% 2,000 2,000 2,000 PAMOT Jersey US LP 3.3% 612 472 612 PEC Israel Finance Corporation 100.0% 161 0 161 Renaissance Fund 3.7% 4,004 4,004 4,004 SI-Wireless, Inc. 3.7% 200 200 200 Soreq Development Corporation(4) 25.0% 2,526 175 175 Teamworks, Ltd. 25.0% 1,000 1,000 1,000 Tel-Al Jerusalem Studios(5) 11.5% 810 2,021 4,200 Tradanet 30.0% 1,326 0 1,326 United Vocal(6) 12.6% 800 800 800 Weizman "Incubator" 16.7% 208 197 208 Wilcom 5.6% 1,055 892 1,000 ------ ------ ------ Total 47,446 37,251 49,659 Total Per Share $2.58 $2.03 $2.70 - ---------------------------------------------------------------------------------------------- (1) Estimated value of El Rad is based on management estimates. (2) General Engineers Limited is a consolidated entity and does not have a carrying value; however, in this analysis its carrying value is estimated as the excess of its assets over its liabilities. (3) Estimated value of Mondex is based on management estimates. (4) Estimated value of Soreq is $175,000 based on management estimates. (5) Estimated value of Tel-Al Jerusalem Studios is $4.2 million based on management estimates. (6) Estimated value of United Vocal is zero based on management estimates. (7) Higher of PEC's current carrying value. - ------------------------------------------------------------[LOGO] Merrill Lynch 26 ================================================================================ Public Holdings ================================================================================ Public Holdings ================================================================================ Property and Building Corporation (Dollars in millions, except per share data)(1) --------------- ------------------ ------------ Total Company PEC's % Interests PEC's Value Valuation Range Valuation Range(2) Per Share(3) --------------- ------------------ ------------ Current Trading Price(08/16/99) $416 $173 $9.40 Historical Trading Analysis 52-Week High/Low $463 - $268 $192 - $112 $10.47 - $6.07 Net Asset Valuation(4) $425 $174 $9.48 --------------- ------------------ -------------- Valuation Range $433 - $409 $180 - $170 $9.80 - $9.26 --------------- ------------------ -------------- (1) Assumes exchange rate of (NIS/US$) 4.20. (2) Assumes PEC Israel Economic Corporation owns 41.6% of the diluted stock. (3) Assumes 18,362,188 shares outstanding. (4) Based on Professor Swary's independent report. - ------------------------------------------------------------[LOGO] Merrill Lynch 28 Public Holdings ================================================================================ Super-Sol (Dollars in millions, except per share data)(1) --------------- ------------------ ------------ Total Company PEC's % Interests PEC's Value Valuation Range Valuation Range(2) Per Share(3) --------------- ------------------ ------------ Current Trading Price (08/16/99) $550 $110 $6.01 Historical Trading Analysis 52-Week High/Low $643 - $437 $129 - $88 $7.02 - $4.78 Comparable Company Analysis LTM Sales(4) 0.65x - 0.45x $741 - $497 $149 - $100 $8.10 - $5.43 LTM EBITDA(4) 10.0x - 7.5x $605 - $441 $121 - $88 $6.62 - $4.81 Comparable Acquisition Analysis LTM Sales(5) 0.80x - 0.50x $925 - $558 $186 - $112 $10.10 - $6.09 LTM EBITDA(5) 11.0x - 8.0x $675 - $474 $135 - $95 $7.34 - $5.17 --------------- ------------------ -------------- Valuation Range $598 - $498 $128 - $100 $6.81 - $5.45 --------------- ------------------ -------------- (1) Assumes exchange rate of (NIS/US$) 4.20. (2) Assumes PEC Israel Economic Corporation owns 20.1% of Super-Sol's diluted stock. (3) Assumes 18,362,188 shares outstanding. (4) Based on "second tier" U.S. supermarket chain such as Food Lion; Winn-Dixie; and the Israeli Supermarket chain Blue Square. (5) Based on transactions in 1998 and 1999. - ------------------------------------------------------------[LOGO] Merrill Lynch 29 Public Holdings ================================================================================ Elron Electronic Industries (Dollars in millions, except per share data)(1) --------------- ------------------ ------------ Total Company PEC's % Interests PEC's Value Valuation Range Valuation Range(2) Per Share(3) --------------- ------------------ ------------ Current Trading Price (08/16/99) $516 $72 $3.92 Historical Trading Analysis 52-Week High/Low $625 - $239 $87 - $33 $4.74 - $1.82 Net Asset Valuation Analysis(4) 15%-25% Discount to Pre-Tax NAV $451 - $345 $63 - $48 $3.43 - $2.62 --------------- ------------------ -------------- Valuation Range $538 - $430 $75 - $60 $4.08 - $3.27 --------------- ------------------ -------------- (1) Assumes exchange rate of (NIS/US$) 4.20. (2) Assumes PEC Israel Economic Corporation owns 13.9% of Elron Electronic Industries diluted stock. (3) Assumes 18,361,188 shares outstanding. (4) NAV valuation based on Warburg research dated April 1999. - ------------------------------------------------------------[LOGO] Merrill Lynch 30 Public Holdings ================================================================================ Gilat Satellite Networks (Dollars in millions, except per share data)(1) --------------- ------------------ ------------ Total Company PEC's % Interests PEC's Value Valuation Range Valuation Range(2) Per Share(3) --------------- ------------------ ------------ Current Trading Price (08/16/99) $1,090 $43 $2.32 Historical Trading Analysis 52-Week High/Low $1,521 - $719 $60 - $28 $3.24 - $1.54 Comparable Company Analysis 1999 EBITDA(4) 20.0x - 16.0x $1,388 - $1,116 $54 - $44 $2.96 - $2.38 1999 EPS(5) 25.0x - 20.0x $1,497 - $1,198 $59 - $47 $3.19 - $2.55 --------------- ------------------ -------------- Valuation Range $1,277 - $1,022 $50 - $40 $2.72 - $2.18 --------------- ------------------ -------------- (1) Assumes exchange rate of (NIS/US$) 4.20. (2) Assumes PEC Israel Economic Corporation owns 3.9% of Gilat Satellite Networks diluted stock. (3) Assumes 18,362,188 shares outstanding. (4) Based on Scientific Atlantic and Standford Telecommunications. (5) Based on EMS Technologies and Standford Telecommunications. - ------------------------------------------------------------[LOGO] Merrill Lynch 31 Public Holdings ================================================================================ Tambour (Dollars in millions, except per share data)(1) --------------- ------------------ ------------ Total Company PEC's % Interests PEC's Value Valuation Range Valuation Range(2) Per Share(3) --------------- ------------------ ------------ Current Trading Price (08/16/99) $105 $46 $2.48 Historical Trading Analysis 52-Week High/Low $121 - $59 $52 - $26 $2.86 - $1.39 Comparable Company Analysis LTM EBITDA 10.00x - 7.00x $149 - $98 $64 - $42 $3.50 - $2.31 1999 EBITDA 8.0x - 6.0x $162 - $117 $70 - $51 $3.82 - $2.75 Comparable Acquisition Analysis LTM Sales 1.20x - 0.80x $158 - $99 $68 - $43 $3.72 - $2.33 LTM EBITDA 11.0x - 8.0x $165 - $115 $72 - $50 $3.90 - $2.71 --------------- ------------------ -------------- Valuation Range $116 - $93 $50 - $40 $2.72 - $2.18 --------------- ------------------ -------------- (1) Assumes exchange rate of (NIS/US$) 4.20. (2) Assumes PEC Israel Economic Corporation owns 43.3% of Tambour's stock. (3) Assumes 18,362,188 shares outstanding. - ------------------------------------------------------------[LOGO] Merrill Lynch 32 Public Holdings ================================================================================ Scitex Corporation (Dollars in millions, except per share data)(1) --------------- ------------------ ------------ Total Company PEC's % Interests PEC's Value Valuation Range Valuation Range(2) Per Share(3) --------------- ------------------ ------------ Current Trading Price (08/16/99) $398 $26 $1.43 Historical Trading Analysis 52-Week High/Low $632 - $247 $42 - $16 $2.27 - $0.89 Comparable Company Analysis 1999 EBITDA 9.5x - 6.5x $568 - $414 $38 - $27 $2.04 - $1.49 Comparable Acquisition Analysis LTM EBITDA 11.0x - 9.0x $423 - $360 $28 - $24 $1.52 - $1.29 --------------- ------------------ -------------- Valuation Range $455 - $1.36 $30 - $25 $1.63 - $1.36 --------------- ------------------ -------------- (1) Assumes exchange rate of (NIS/US$) 4.20. (2) Assumes PEC Israel Economic Corporation owns 6.6% of Scitex Corporation's diluted stock. (3) Assumes 18,362,188 shares outstanding. - ------------------------------------------------------------[LOGO] Merrill Lynch 33 Public Holdings ================================================================================ United Pan European Communication (Dollars in millions, except per share data) --------------- ------------------ ------------ Total Company PEC's % Interests PEC's Value Valuation Range Valuation Range(1) Per Share(2) --------------- ------------------ ------------ Current Trading Price (08/16/99) $8,366 $47 $2.54 Historical Trading Analysis 52-Week High/Low $9,941 - $4,358 $55 - $24 $3.01 - $1.32 Comparable Company Analysis Enterprise Value per Subscriber(3) $10,176 - $6,876 $57 - $38 $3.08 - $2.08 ---------------- ------------------ ------------- Valuation Range $10,176 - $6,876 $57 - $40 $3.01 - $2.18 ---------------- ------------------ ------------- (1) Assumes PEC Israel Economic Corporation owns 0.6% of UPC's diluted stock. (2) Assumes 18,362,188 shares outstanding. (3) Based on Enterprise Value per subscriber of $1,700-$2,300. - ------------------------------------------------------------[LOGO] Merrill Lynch 34 Public Holdings ================================================================================ Other Public Holdings - ------------------------------------------------------------------------------------------------------------------------------------ Share Price Shares in PEC's Market Value of PEC's Unrealized Projected Capital Value after Other Public Holdings (8/16/1998) Ownership PEC's Holdings Cost Gain (Loss) Gain/(Loss) Taxes Taxes - ------------------------------------------------------------------------------------------------------------------------------------ Agis Industries 2,710 727,000 4,693 5,882 (1,189) (297) 4,990 Cell Pathways $ 11.00 160,527 1,766 763 1,003 251 1,515 Electronic Line 939 833,250 1,844 1,999 (135) (34) 1,897 Gilat Communications $ 15.06 888,075 13,377 1,010 12,367 3,092 10,285 Ham-Lat (Israel Canada) 2,200 768,676 4,028 4,398 (370) (92) 4,120 Isrotel 1,137 979,698 2,653 2,024 629 157 2,496 Klil Industries 9,510 418,865 9,488 7,658 1,830 457 9,030 Liraz 3,670 1,251,288 10,938 6,288 4,650 1,163 9,776 Logal $ 0.50 248,690 124 403 (279) (70) 194 Maxima (NIS 1 shares) 600 790,803 1,130 1,719 1,258 314 2,662 (NIS 5 shares) 2,460 315,159 1,847 -- -- -- -- Mul-T-Lock 860 2,283,017 4,677 3,260 1,417 354 4,322 Nice $ 29.44 576,833 16,981 10,492 6,489 1,622 15,358 Tefron $ 10.56 958,433 10,123 262 9,861 2,465 7,658 ------ ------ ------ ----- ------ Exchange rate (NIS/$) 4.20 Total 83,687 46,158 37,530 9,382 74,305 Capital Gains Tax 25% PEC's Share Outstanding 18,362,188 Per share $ 4.56 $ 2.51 $ 2.04 $ 0.51 $ 4.05 ==================================================================================================================================== Source: Bloomberg, PEC, SEC Filings - ------------------------------------------------------------[LOGO] Merrill Lynch 35