Matrix, Magic merger boosts each firms’ shares

The merger between tech firms Matrix IT (TASE: MTRX) and Magic Software program Enterprises (TASE: MGIC; Nasdaq MGIC) is transferring forward this week with the shareholders of each firms, which belong to System Programs (TASE: FORTY; Nasdaq: FORTY, assembly to approve the deal. Chief Capital Markets predicted final week that the merger incorporates main potential and identified that even earlier than the merger has been accomplished, each shares have outperformed their benchmarks.

Chief Capital Markets analyst Dina Korshunov notes that for the reason that settlement was introduced in March, each shares have soared. Matrix’s inventory has climbed by about 69% and Magic has jumped by 91%, whereas the Tel Aviv 125 index, which incorporates each, rose by 41% and the Nasdaq, which Magic can be listed on, rose by 35% (nonetheless, over the previous three years, Magic has underperformed each indices).

The deliberate transfer will likely be carried out by means of a reverse triangular merger, upon completion of which Magic will develop into a completely owned subsidiary of Matrix. The ratio within the merger stipulates that after the deal is accomplished, Magic shareholders will maintain 31.1% of Matrix’s share capital, and the rest will likely be held by the present shareholders of the corporate, led by System (which at the moment holds 48% of Matrix and 47% of Magic). In response to Korshunov, the alternate ratio just isn’t anticipated to alter because of the authorized complexity.

The discover for the shareholders assembly printed by Matrix, included an opinion on the equity of the deal by Prometheus, and its conclusion was that the conversion ratio is honest and affordable. In response to Prometheus, when analyzing the financial parameters, in some instances the conversion ratio is healthier for Magic shareholders and in different instances for Matrix shareholders. For instance, by way of income and enterprise worth, the ratio is healthier for Magic, and by way of working and internet revenue and internet debt, it favors Matrix.

Chief observes that the merger is anticipated to shut in January 2026, after the completion of quite a few technical situations, in addition to the approval of shareholders. In accordance Korshunov, the rise within the worth of the businesses for the reason that merger has resulted of their mixed worth now rating them in eighth place amongst publicly-traded IT firms within the US, and in third place in Europe (solely Capgemini and Indra are bigger, however considerably). In response to Chief’s evaluate, the worth of the merged firm will likely be $3.5 billion. In response to the analyst, “On completion of the deal, the merger is anticipated to contribute to bettering marketability, rising publicity to worldwide buyers and enabling entry into main indices, together with the Tel Aviv 35.”

Synergy and operation financial savings

Korshunov mentions a number of benefits to the merger together with enterprise, advertising and operational synergy, and operational financial savings, “Because of the implementation of a rigorous administration tradition that characterizes Matrix.” For example of synergy, she cites the cloud sector: “Matrix has a big and well-established exercise within the discipline, with growth into Europe, and Magic additionally has vital exercise within the cloud, with a rising presence within the US. Collectively, the mixture of actions is anticipated to create a robust and rising world enterprise line.

As well as, Matrix’s (and Magic’s) strategic and distinctive relationship with Amazon’s AWS additional strengthens the expansion potential within the discipline.” Korshunov provides, “Within the US, too, the worth proposition to prospects and the place of the merged firm are considerably strengthened, because of the mixture of the skilled providers that Magic affords along with Matrix’s providers.” In response to her, the merger will enable for a major growth of the worldwide footprint and a strengthening of the presence outdoors Israel, significantly within the US, so after the deal is accomplished, the share of income overseas will likely be 25% (about 17% within the US), in contrast with 8% for Matrix at present.

“Low-risk merger”

Matrix is an IT providers supplier led by CEO Moti Gutman, and Magic offers providers within the discipline of software program improvement and integration underneath CEO Man Bernstein, who additionally serves as CEO of System, the father or mother firm of each Matrix and Magic.

Korshunov observes that the merger is exclusive and with out financing prices, in addition to with out excessive depreciation bills. Since there isn’t a change of management within the transaction, accounting permits it to be accomplished with out depreciation and impairment. In Korshunov’s evaluation, “The merger has low integration dangers, provided that the 2 are a part of the identical enterprise group in tangential areas of exercise.”

Magic is at the moment a dual-listed inventory, however the plan is that within the first part after the merger, the merged firm will likely be traded solely on the Tel Aviv Inventory Trade (TASE), and sooner or later the problem of twin itemizing will likely be re-examined. As of at present, Matrix’s market cap is NIS 9.2 billion, and Magic’s is NIS 4 billion.

Printed by Globes, Israel enterprise information – en.globes.co.il – on December 9, 2025.

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