SCHEDULE: Formula Systems Gains Full Control of Magic Software

Formula Systems (1985) Ltd. and Matrix IT Ltd. now beneficially own 100% of Magic Software Enterprises Ltd. following a reverse triangular merger.

Summary

• Formula Systems (1985) Ltd. and Matrix IT Ltd. (the "Reporting Persons") filed Amendment No. 20 to their Schedule 13D, updating beneficial ownership of Magic Software Enterprises Ltd. ("Magic").
• On February 24, 2026, Magic was merged in a reverse triangular merger with Matrix IT Ltd., making Magic a wholly-owned subsidiary of Matrix.
• Formula's beneficial ownership percentage of Magic's outstanding Ordinary Shares increased from 45.3% (as reported in Amendment No. 19) to 100%.
• Formula holds 47.67% of Matrix, which now wholly owns Magic, leading to Formula's deemed control.
• The Reporting Persons collectively beneficially own 49,099,305 Ordinary Shares of Magic, representing 100% of the total issued and outstanding shares.
• The acquisition was made for long-term investment purposes, aiming to strengthen market position, expand capabilities, and enhance shareholder value.
• The source of funds for the acquisition was working capital.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive development for Formula Systems, as it consolidates control over Magic Software, aligning with a stated long-term investment strategy and potential for synergistic value creation.

Positives

• Formula Systems (1985) Ltd. has consolidated its control over Magic Software Enterprises Ltd., increasing its beneficial ownership to 100%.
• The merger is described as a compelling strategic opportunity to strengthen market position, expand capabilities, and enhance shareholder value.
• The transaction was funded using working capital, indicating internal financial capacity for the acquisition.

Future Outlook

The Reporting Persons acquired the Ordinary Shares of Magic for long-term investment purposes. They may from time to time acquire additional Ordinary Shares in the open market or in privately negotiated transactions to support their control position. There are no current plans to dispose of securities of the Issuer or effect other transactions described in Schedule 13D. The merger is expected to strengthen market position, expand capabilities, and enhance value for shareholders.

Management Comments

• Magic and Matrix believed that the merger represented a compelling strategic opportunity, strengthening the companies' market position, expanding its capabilities, and enhancing value for shareholders.

Industry Context

StockSavvy.ai notes that consolidation within the information technology sector is a common strategy for companies seeking to gain market share, leverage synergies, and offer a broader range of services. This merger positions Formula Systems, through Matrix, to potentially integrate Magic's software products and services more deeply into its existing IT solutions portfolio, enhancing its competitive stance in Israel and internationally.

Comparison to Industry Standards

• This filing primarily details a change in beneficial ownership and corporate control rather than operational or financial performance, making direct comparisons to industry-standard financial benchmarks less applicable.
• Strategic mergers and acquisitions are a standard practice in the IT industry for growth and market consolidation, similar to moves seen by global players like IBM acquiring Red Hat or Salesforce acquiring Slack, albeit on a different scale.
• The stated purpose of strengthening market position and expanding capabilities aligns with common M&A rationales across the technology sector.

Management Changes

Corporate Governance

Legal Proceedings

• No criminal convictions or civil judgments or injunctions to report under Item 2(d) or (e) of Schedule 13D for the Reporting Persons or their management.

Related Party Transactions

• Guy Bernstein, who serves as CEO of Magic and Formula, and Chairman of Matrix, owns approximately 1,797,973 Ordinary Shares (11.73%) of Formula and 88,173 ordinary shares (0.095%) of Matrix.
• Asaf Berenstin, who serves as CFO of Magic and Formula, owns approximately 31,833 Ordinary Shares (0.0021%) of Formula and 22,469 ordinary shares (0.0243%) of Matrix.
• Asseco Poland S.A. beneficially owns 3,958,154 ordinary shares, or 25.82%, of the outstanding shares of Formula.

Stakeholder Impact

• Shareholders of Magic (prior to the merger) would have had their shares converted or acquired as part of the merger, resulting in Magic becoming a wholly-owned subsidiary.
• Shareholders of Matrix and Formula may benefit from the enhanced value, strengthened market position, and expanded capabilities resulting from the merger.
• Employees of Magic and Matrix may experience changes related to organizational integration and potential synergies.
• Customers of Magic and Matrix could benefit from a broader range of integrated IT solutions and services.

Next Steps

• Formula may from time to time acquire additional Ordinary Shares in the open market or in privately negotiated transactions to support its control position in the Issuer.

Key Dates

Keywords

Magic Software Enterprises, Formula Systems, Matrix IT, Schedule 13D, Beneficial Ownership, Merger, Acquisition, Corporate Control, Information Technology, Software