Matrix IT to acquire Magic Software Enterprises in major Israeli IT merger.

Matrix IT, Israel's largest IT services company, will acquire Magic Software Enterprises in a reverse triangular merger. The merged company will have a market cap of NIS 7.7 billion and Matrix shareholders will own 68.875% while Magic shareholders will own 31.125%. The consideration for Magic shareholders will be in the form of Matrix shares. The deal is subject to shareholder approval and requires no cash consideration.

In a groundbreaking move, Matrix IT, Israel's largest IT services provider, and Magic Software Enterprises, a leading software development tools company, have agreed to merge in a reverse triangular transaction. The combined entity, valued at approximately NIS 7.7 billion ($2.2 billion), will create a formidable player in the IT industry, both locally and internationally [1].

Matrix IT, founded in 2001 and currently trading at a market capitalization of NIS 5.7 billion ($1.6 billion), is known for its robust technological solutions across various sectors, employing over 11,000 people [1]. With a strong focus on mergers and acquisitions, Matrix has completed over 100 deals, positioning itself as a significant player in the Israeli IT market.

Magic Software Enterprises, founded in 2001 and valued at NIS 2.2 billion ($610 million), specializes in software development tools and operates in a complementary market to Matrix [1]. The company reported earnings of NIS 26 million ($7.2 million) in the first nine months of 2024 [1].

The merger, expected to be signed on Monday, will position the combined company as a significant player in the IT industry, with Matrix shareholders owning 68.875% and Magic shareholders owning 31.125% [1]. The deal is subject to shareholder approval and does not require any cash consideration.

This strategic merger represents a significant shift in Israel's IT landscape, creating a unified company under the ownership of Formula Systems, which already holds a majority stake in both firms [2]. The final approval from the shareholders is pending, with legal oversight being handled by the Herzog Fox & Neeman law firm.

The combined company, expected to be valued at approximately $2.2 billion, is expected to offer a broad range of technological solutions, positioning itself as a significant player in the global IT market.

References:

[1] Calcalistech. (2024, February 1). Matrix and Magic to merge in $2.2 billion deal. Retrieved from https://www.calcalistech.com/ctechnews/article/syygjn3ijg
[2] Undercode News. (2024, February 1). Magic and Matrix merge in $2.2 billion deal: What this means for the IT industry. Retrieved from https://undercodenews.com/magic-and-matrix-merge-in-2-billion-deal-what-this-means-for-the-it-industry/