Matrix IT (TASE: MTRX), the largest IT services company on the Tel Aviv Stock Exchange, has signed a memorandum of understanding to buy Magic Software Enterprises (TASE: MGIC; Nasdaq MGIC). According to a notice to the Tel Aviv Stock Exchange, Matrix will buy all the shares in Magic in a reverse triangular merger, and Magic will become a non-listed company wholly owned by Matrix. The consideration to Magic shareholders will be in the form of Matrix shares, giving them 31.125% of the merged company while Matrix’s shareholders will own 68.875%. The market cap of the merged company will be about NIS 7.7 billion.
Both companies are part of the Formula Systems (TASE: FORTY; Nasdaq: FORTY) group. Guy Bernstein is CEO of both Formula and Magic, and chairperson of Matrix. Matrix’s CEO is Moti Gutman. The merger will require the approval of the shareholders. Both companies’ shares are held by Israeli financial institutions, among them Migdal, The Phoenix Holdings, and Harel in Matrix, and Clal in Magic.
Matrix has a market cap of NIS 5.7 billion. Formula Systems holds 48.2% of its shares, currently worth NIS 2.76 billion. Magic has a market cap of $631 million, after its share price on Nasdaq rose almost 8% yesterday, following the announcement of the merger MOU, against the market trend. Formula Systems owns 46.7% of Magic, a stake worth $290 million. Formula Systems itself is a dual-listed stock, with a market cap of $1.4 billion on Nasdaq. Its share price rose by 5.33% yesterday. The main shareholder in Formula Systems is Polish company Asseco, with a holding of 25.8%. Besides Matrix and Magic, Formula Systems also controls Sapiens (TASE: SPNS; Nasdaq: SPNS), which provides software to the insurance industry.
Both Matrix and Magic are due to release quarterly financials this week. Neither Matrix nor Magic nor Formula Systems issued a response to the report.
Published by Globes, Israel business news – en.globes.co.il – on March 11, 2025.
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