Magic Software intends to merge with Matrix, go private

Magic Software (MGIC) on Monday announced that it signed an memorandum of understanding with respect to a proposed merger with Matrix I.T Ltd. Magic and Matrix agreed to negotiate a definitive agreement regarding a merger, under which Matrix will acquire the entire share capital of Magic on a fully diluted basis, 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, based on exchange ratio derived from valuations of the companies. Magic’s shareholders will receive merger consideration in Matrix shares, based on the relative valuations of both companies and the derived exchange ratio. 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.