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Magic Software and Matrix I.T sign MOU to Consider Merger
MGICMagic Software Enterprises(MGIC) GlobeNewswire·2025-03-11 00:15

Core Viewpoint - Magic Software Enterprises Ltd. has signed a Memorandum of Understanding (MOU) for a proposed merger with Matrix I.T Ltd., which will result in Matrix acquiring the entire share capital of Magic, making it a wholly-owned subsidiary [2][14]. Company Overview - Magic Software Enterprises Ltd. is a global provider of IT consulting services and application development platforms, while Matrix I.T Ltd. is a leading public Israeli IT services company [2][23]. - The combined entity is expected to have an aggregate market value of 2.1billion(approximately7.7billionILS)andoperateinaround50countries,servingapproximately6,000activeclientswithover15,000employees[4][6].MergerStructureandConsideration−Themergerwillbeexecutedasareversetriangularmerger,withMagic′sshareholdersreceivingMatrix′sordinarysharesbasedonavaluationexchangeratioof31.1252.1 billion (approximately 7.7 billion ILS) and operate in around 50 countries, serving approximately 6,000 active clients with over 15,000 employees [4][6]. Merger Structure and Consideration - The merger will be executed as a reverse triangular merger, with Magic's shareholders receiving Matrix's ordinary shares based on a valuation exchange ratio of 31.125% for Magic and 68.875% for Matrix [14][12]. - The merger consideration will be based on the relative valuations of both companies, and the transaction is expected to be accounted for using the pooling of interest method, avoiding the recognition of original goodwill [14][10]. Strategic Rationale - The merger is seen as a strategic opportunity to enhance market position, expand capabilities, and create operational synergies [5][10]. - Key benefits include enhanced scale, geographic complementarity, and an expanded product and service portfolio, allowing for cross-selling opportunities [5][13]. Financial Profile - The combined entity is projected to generate revenues of 2.1 billion, with a gross profit of approximately 382millionandanetincomeattributabletonon−controllinginterestsofabout382 million and a net income attributable to non-controlling interests of about 110.6 million [6][4]. - The merger is expected to strengthen the financial profile and growth potential of the combined company, enabling it to invest in innovation and strategic growth initiatives [10][13]. Regulatory and Approval Process - The completion of the merger is subject to negotiations, due diligence, and the signing of a definitive agreement, along with obtaining necessary regulatory approvals [16][20]. - The merger will require the approval of the general meetings of both companies, as well as compliance with Israeli law regarding minority shareholders [20][16].