The new entity, to be called Spacenet, Inc. (Spacenet), will continue to support all of GE Spacenet's product lines as well as its 120 customers in 41 countries, making Gilat one of GE Americom's largest customers. Spacenet products, stationery and literature will display the GE logo together with the Gilat logo for the next three years.

Under the terms of the merger agreement, GE Americom will receive five million newly-issued shares equal to approximately 30 percent of Gilat's outstanding shares and will become Gilat's largest single shareholder, with two out of seven seats on Gilat's Board of Directors. The deal is subject to the approval of Gilat shareholders and governmental authorities, including the US Department of Justice, and the US Federal Communications Commission for transfer of control of certain permits and licenses.

"Gilat has been Spacenet's primary product provider since Spacenet's inception," said John F. Connelly, Chairman and Chief Executive Officer of GE Americom. "We have chosen Gilat as our partner based on its strong product development, and superior quality and manufacturing capabilities."

Connelly continued, "The combined company will have superior reach, distribution and product position which will allow it to compete successfully in any part of the world. The merger combines Gilat's outstanding development skills and hardware expertise with Spacenet's software capabilities and network operating strengths."

Gilat Chairman and Chief Executive Officer Yoel Gat explained, "The merger of Spacenet into Gilat will create a vertically-integrated, globally-competitive firm focused purely on VSATs. These strengths should help us realize our goal of becoming the world's leading VSAT company."

"This deal is expected to be non-dilutive in 1999 and accretive in 2000," added Gat. "We believe that the strong alliance between GE Americom and Gilat, coupled with the existing service infrastructure in Spacenet, will position the combined company to prosper from emerging broadband Internet applications and services."

GE Spacenet

GE Spacenet is a world leader in providing global communications networks and services. With headquarters in McLean, Virginia, GE Spacenet is a wholly-owned subsidiary of GE American Communications, Inc. (GE Americom), a GE Capital company. With over 20 years of experience, GE Americom is one of the world's largest satellite operators and a pioneer in satellite distribution of television programming. GE Americom operates 11 satellites providing satellite-based solutions for North America, Europe, the Middle East and now, with the planned launch of GE-1A, Asia. In South America, GE Americom is an equity investor in the NahuelSAt satellite system. With the planned launch of GE-1A in 1999, GE Americom's satellite services will be able to reach 80 percent of the world's population.

Gilat

Gilat Satellite Networks Ltd. designs, develops, manufactures, markets and supports Very Small Aperture Terminal (VSAT) satellite earth stations and related hub equipment and software. Gilat products are incorporated into telecommunications networks that provide satellite-based communications between a central location and a large number of geographically dispersed sites. The Company offers a range of products: Skystar Advantage(TM), a joint development of GE Spacenet and Gilat, enables interactive, transaction-oriented applications. ISAT(R) facilitates frame-relay delivery of voice and data. FaraWay(TM) VSAT offers multi-channel, toll-quality telephone, fax and data services. DialAway(R) VSAT allows for one- to three-channel, telephone and fax service to rural communities. SkySurfer(TM) VSAT delivers interactive corporate communications; SkyBlaster(TM), when incorporated into the SkySurfer system, provides a satellite return path. OneWay(TM) VSAT provides unidirectional data broadcasts.

In December 1996, Gilat acquired Skydata Inc., a Florida-based VSAT company specializing in the paging and data broadcast markets. As of May 1998, Gilat holds a minority share in Global Village Telecom (GVT), which specializes in the operation of satellite-based rural telephony networks, and in KSAT, a joint venture with Singapore-based Keppel Communications, which is dedicated to providing satellite-based telecommunication services in China.