IT Services Giants Matrix and Magic Software Merge
Matrix USA has completed its merger with Magic Software Enterprises, forming a global IT services powerhouse. The combined company now employs over 15,000 professionals and ranks among the top 10 publicly listed IT firms in the U.S. and Europe.
The all-stock merger was finalized on February 24, 2026, through a reverse triangular merger, which resulted in Magic Software becoming a private, wholly-owned subsidiary of Matrix. Following the deal, Magic Software's shares were delisted from the Nasdaq and the Tel Aviv Stock Exchange. Under the terms of the agreement, shareholders of Magic Software received 0.5878202 Matrix ordinary shares for each share they held. This arrangement gives former Magic shareholders a 31.125% stake in the combined entity, with existing Matrix shareholders holding the remaining 68.875%. The transaction creates a combined company with a market valuation estimated between $3.5 billion and $4 billion. Pro forma results for 2024 indicate the merged entity would have generated approximately NIS 7.6 billion in revenue with a net profit of around NIS 448 million. Individually in 2024, Matrix reported record revenues of approximately NIS 5.6 billion and a net profit of about NIS 288.2 million. For the same year, Magic Software's revenue was over NIS 2 billion, with a net profit of roughly NIS 160 million. The leadership of the newly integrated organization includes Moti Gutman, the longtime CEO of Matrix, who also serves as the Chairman of Magic Software. Lior Blik has taken on the role of CEO for both Matrix USA and Magic Software, spearheading the combined operations in North America. A key strategic driver for the merger is the combination of Matrix's dominant position in the Israeli IT market with Magic Software's significant international presence, particularly in the United States. The move is expected to expand Matrix's global footprint and enhance its service offerings in areas like cloud services, cybersecurity, and digital transformation. The deal was orchestrated by their common controlling shareholder, Formula Systems, which is owned by the Polish corporation Asseco. Due to this relationship, independent committees were established at both companies to evaluate and approve the terms of the merger. Following the announcement, some financial analysts expressed a cautious outlook. William Blair, for instance, downgraded Magic Software's stock from "Outperform" to "Market Perform," citing the specifics of the merger agreement and the future ownership structure.
