Who Owns Magic Software Company?

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Who Really Owns Magic Software?

Understanding the ownership structure of a company is crucial for investors and stakeholders alike. The proposed merger of Magic Software SWOT Analysis with Matrix I.T. Ltd., announced in March 2025, presents a compelling case study in how corporate ownership can shift dramatically. This potential $2.1 billion transaction raises critical questions about the future of Magic Software International and the influence of its shareholders.

This exploration into Magic Software ownership will dissect the company's history, from its founding by David Assia and Yaki Dunietz in 1983 to its current market position. We'll examine the roles of key investors, the composition of the board, and the impact of recent developments, including the proposed merger, on the Magic Software company's ownership structure. Determining who controls Magic Software stock and the company's direction is vital for anyone assessing its future.

The origins of Magic Software can be traced back to 1983, when it was established by David Assia and Yaki Dunietz. Initially, the company emerged as a spin-off from 'Mashov Computers,' an Israeli firm. The initial name given to the new entity was 'Mashov Software Export (MSE).'

While specific details about the equity splits or shareholdings at the company's inception are not publicly available, David Assia is recognized as a founder. The early development of the 'Magic' application generator, created by Jonathan (Yoni) Hashkes and Miko Hasson, was a key factor in the company's early direction.

In 1991, the company rebranded as Magic Software Enterprises, and it became the first Israeli software company to be listed on NASDAQ. Later, in 1998, the company was acquired by the Formula Group, led by Dan Goldstein, which led to a significant change in its ownership structure.

Founders

David Assia and Yaki Dunietz founded Magic Software in 1983.

Initial Name

The company was initially known as 'Mashov Software Export (MSE).'

Key Innovation

The 'Magic' application generator was a core innovation.

NASDAQ Listing

In 1991, Magic Software became the first Israeli software company to be listed on NASDAQ.

Acquisition

In 1998, Formula Group, led by Dan Goldstein, acquired the company.

Early Technology

The 'Magic' platform's metadata-driven approach allowed for development without traditional compiling or linking.

The early ownership of Magic Software was significantly shaped by its founders and the technological innovation of its core product. The acquisition by Formula Group in 1998 marked a pivotal shift in the company's ownership structure. For a more in-depth look at the company's history, consider reading the Brief History of Magic Software. The evolution of Magic Software ownership and its market position continues to be influenced by factors such as its strategic acquisitions and the performance of its Magic Software stock.

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The ownership structure of Magic Software has evolved significantly since its inception. A pivotal moment was its initial public offering (IPO) on NASDAQ on August 28, 1991, making it the first Israeli software company to be listed there. Shares have also been traded on the Tel Aviv Stock Exchange (TASE) since November 16, 2000. As of December 31, 2024, the company had 49,099,305 ordinary shares issued and outstanding. This public listing opened the door to a diverse group of investors and influenced the company's strategic direction.

The company's ownership structure is currently dominated by Formula Systems (1985) Ltd., which held 46.71% of Magic Software's outstanding ordinary shares as of April 1, 2024. This significant stake gives Formula Systems considerable influence over the company's strategic decisions and governance. Other key institutional investors play a role, including Harel Insurance Investments & Financial Services Ltd., which increased its portfolio in Q1 2025 by adding 2,764,487 shares, and held 11.52% as of March 31, 2025. Clal Insurance Enterprises Holdings Ltd. held 6.97% as of January 1, 2023. The distribution of holdings as of June 12, 2025, shows 47.02% held by interested parties, 18.49% by institutional investors, and 34.49% as float.

A significant shift in Magic Software's ownership is the proposed merger with Matrix I.T. Ltd., announced on March 10, 2025. This reverse triangular merger would see Matrix I.T. acquire all of Magic Software's share capital, turning Magic Software into a private, wholly-owned subsidiary of Matrix. Magic Software shareholders are expected to hold 31.125% of the issued and outstanding share capital of Matrix post-merger, while Matrix's pre-merger shareholders will retain 68.875%. Given that Formula Systems (1985) Ltd. is the controlling shareholder for both Magic Software (46.71%) and Matrix (48.21%), this merger is facilitated by the existing ownership structure. The delisting from NASDAQ and TASE is expected upon the merger's anticipated approval in the third quarter of 2025, which will reshape Magic Software's ownership landscape.

Ownership Highlights

Key facts about Magic Software's ownership structure and major stakeholders.

• Formula Systems (1985) Ltd. is the primary controlling shareholder.
• The merger with Matrix I.T. Ltd. will privatize Magic Software.
• Institutional investors include Harel and Clal Insurance.
• The company was the first Israeli software company to go public on NASDAQ.

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The Board of Directors of Magic Software Enterprises plays a key role in the company's governance, working with its major shareholders. As of June 1, 2024, there were 49,099,305 outstanding ordinary shares entitled to vote. Shareholders of record as of June 28, 2024, were eligible to vote at the annual general meeting.

While a comprehensive list of all current board members and their specific affiliations for 2025 isn't explicitly detailed in the provided search results, the company's annual report on Form 20-F for the fiscal year ended December 31, 2024, filed on May 14, 2025, contains audited financial statements and other relevant information, including potentially board composition. Previous filings, such as the Form 6-K from July 31, 2024, indicate proposals for the re-election of directors such as Mr. Guy Bernstein, Ms. Naamit Salomon, and Mr. Avi Zakay to serve until the next annual general meeting. Guy Bernstein is also listed as the CEO. The board recommends a 'FOR' vote for the re-election of nominated directors and other proposals.

The voting structure generally operates on a one-share-one-vote basis for ordinary shares. Shareholders can vote in person, by mail, or electronically. For shares held in 'street name' through a broker or bank, beneficial owners need to obtain a 'legal proxy' to vote in person or follow the voting instructions provided by their intermediary. Shareholders holding shares through members of the TASE can also vote electronically via the Israel Securities Authority's system. A quorum for a shareholder meeting typically requires the presence of two shareholders holding at least 25% of the voting rights. For more insights on the company's strategic approach, explore the Marketing Strategy of Magic Software.

Key Takeaways on Magic Software Ownership

The Board of Directors oversees Magic Software, working with major Magic Software shareholders. Shareholders vote on a one-share-one-vote basis. Re-elections of directors are common, as seen in filings from July 2024.

• The board recommends a 'FOR' vote for the re-election of nominated directors and other proposals.
• Shareholders can vote in person, by mail, or electronically.
• A quorum for a shareholder meeting typically requires the presence of two shareholders holding at least 25% of the voting rights.
• The company's annual report on Form 20-F for the fiscal year ended December 31, 2024, filed on May 14, 2025, contains audited financial statements and other relevant information, including potentially board composition.

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Over the past few years, Magic Software has seen significant shifts in its ownership structure. The most notable change is the proposed merger with Matrix I.T. Ltd., announced on March 10, 2025. This deal, valued at $2.1 billion, will result in Matrix acquiring all outstanding shares of Magic, making Magic a private subsidiary. Upon completion, Magic's shareholders are expected to hold 31.125% of Matrix's shares, while existing Matrix shareholders will own 68.875%. This strategic move will lead to the delisting of Magic Software's shares from both the TASE and NASDAQ.

In terms of institutional ownership, there have been notable movements among investors. For instance, Harel Insurance Investments & Financial Services Ltd. increased its holdings by 2,764,487 shares in Q1 2025. Conversely, ASSENAGON ASSET MANAGEMENT S.A. reduced its holdings by 140,591 shares in Q4 2024, and TRUFFLE HOUND CAPITAL, LLC removed 130,000 shares in Q1 2025. As of June 5, 2025, there were 124 institutional owners holding a total of 10,886,885 shares. Major institutional shareholders include Clal Insurance Enterprises Holdings Ltd., Harel Insurance Investments & Financial Services Ltd., and Phoenix Holdings Ltd. This indicates a dynamic landscape for Magic Software ownership.

Magic Software has also been actively involved in strategic acquisitions, such as the $25 million purchase of Appush in August 2022. The company reported record revenue of $147.3 million in Q1 2025, a 12.7% year-over-year increase, driven by strong demand in cloud, DevOps, AI services, and the defense sector. Despite a dip in gross margin and operating cash flow, the company reaffirmed its full-year 2025 revenue guidance of $593 million to $603 million, anticipating 7.3% to 9.1% year-over-year growth. The merger with Matrix IT is expected to close in Q3 2025. The changes in Magic Software ownership are significantly impacting its future.

Institutional Ownership

Institutional investors have adjusted their positions, with some increasing and others decreasing their holdings of Magic Software stock.

Merger Impact

The proposed merger with Matrix I.T. Ltd. will significantly alter the Magic Software ownership structure and its public listing status.

Financial Performance

Despite some financial challenges, Magic Software has shown strong revenue growth, especially in key sectors like cloud and AI.

Future Outlook

The company is projecting continued revenue growth for 2025, despite the upcoming changes in Magic Software ownership.

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