Magic Software Enterprises, Matrix I.T Sign MoU To Merge

(RTTNews) - Magic Software Enterprises Ltd. (MGIC), a global provider of IT consulting services and end-to-end integration and application development platforms solutions, announced that it signed an Memorandum of Understanding with respect to a proposed merger with Matrix I.T Ltd.

MGIC closed Monday's regular trading at $12.85 up $0.95 or 7.98%.

According to the provisions of the MOU, Magic and Matrix agreed to negotiate a definitive agreement regarding a merger, under which Matrix will acquire the entire share capital of Magic, by way of a reverse triangular merger, upon completion of which Magic will become a private company wholly owned by Matrix. The consideration to Magic's shareholders will be in the form of Matrix's ordinary shares.

Formula Systems (1985) Ltd., holding 46.71% of Magic and 48.21% of Matrix's outstanding ordinary shares, is recognized as the controlling shareholder for both companies.

The combined entity's aggregate market value is expected to be $2.1 billion.

Upon completion of the Merger, Matrix will acquire the entire share capital of Magic on a fully diluted basis by way of a reverse triangular merger, and Magic will become a private wholly-owned subsidiary of Matrix. Ordinary shares of Matrix will continue to be traded exclusively on the Tel-Aviv Stock Exchange Ltd. Magic's ordinary shares are expected to be delisted from trading on the TASE and NASDAQ.

Magic's shareholders will hold 31.125% of the issued and outstanding share capital of Matrix, and the shareholders who held Matrix's shares prior to the Merger will hold 68.875%, both on a fully diluted basis. The Companies may distribute dividends in accordance with the provisions of their respective distribution policies as in effect on the date of the MOU, for the year 2024 and for the first and second quarters of 2025, without it affecting the agreed relative valuation ratio of 31.125%/68.875%.