Matrix and Magic to Merge into $4 Billion IT Giant

Overview of the Deal

The merger between Matrix IT and Magic Software Enterprises is set to create Israel’s largest IT group and one of the top publicly traded IT services companies in the U.S. and Europe. Both companies are subsidiaries of Formula Systems, which orchestrated the move to consolidate its holdings and expand its global footprint.

Key Details of the Merger:

• Structure:The deal is being executed as a reverse triangular merger. Upon completion, Magic Software will become a private company fully owned by Matrix and will be delisted from both the NASDAQ and the Tel Aviv Stock Exchange (TASE).
• Valuation:The combined entity is expected to have a market valuation of approximately $3.5 to $4 billion(over NIS 13 billion).
• Shareholding:The merger is an all-stock deal. Existing Magic shareholders will receive Matrix shares, resulting in them holding 31.1%of the merged company, while existing Matrix shareholders will hold 68.9%.
• Timeline:Shareholders of both companies officially approved the merger in December 2025. The deal is expected to be fully completed in the first quarter of 2026, pending final regulatory and procedural approvals.

Strategic Impact:

• Global Reach:The combined company will operate in 50 countries, serving over 6,000 customersand employing more than 15,000 people.
• Market Position:Matrix, which is dominant in the Israeli market, will leverage Magic’s strong international presence—particularly in the U.S. market, which accounts for more than half of Magic’s revenue.
• Indices:The merger is expected to increase the stock’s liquidity and potentially secure a spot in major trades like the Tel Aviv 35.

“For us, this merger constitutes a ‘big bang,’ expected to create a significant technological entity with a broad global presence.”

— Moti Gutman, CEO of Matrix