Magic Software in talks for next acquisition

Magic Software is in negotiations with three companies after raising $21 million in a private placement late last year.

Sources inform ''Globes'' that Magic Software Enterprises Ltd. (Nasdaq: MGIC; TASE: MGIC) is currently in contact with three companies as acquisition targets, after it raised $21 million in a private placement late last year, bringing its cash reserves to over $50 million.

The talks are in varying stages, and may result in one or more deals, although it is also possible that nothing will result at all.

At the Oppenheimer & Co. conference last week, Magic CEO Guy Bernstein spoke about new markets that the company is targeting - cloud computing and mobile - and the possibility of acquisitions.

Magic acquired two companies in 2010. In February, it acquired the assets of a US IT consultancy firm for $11.8 million, and in December, it acquired the controlling interest in South African IT distributor Magix Integration Ltd. for $2.5 million.

Magic VP M&A Amit Birk told "Globes" today, "We constantly examine acquisition options. Under our guidelines, a company should be mature, financially sound, and have a customer base that includes blue-chip companies. The idea is to open the customers' doors to Magic's products. In any case, there is no pressure to make a deal tomorrow morning."

Birk said that Magic was seeking acquisitions in the fields of business intelligence (BI) and business process management (BPM). "It could also be a service company, assuming that it has the right synergy of technology and business," he said.

Another possibility could be the acquisition of a mobile solutions company. Magic recently entered this market with the launch of its mobile enterprise applications development platform, which enables product development independent of smartphone's operating systems. The platform initially supports Blackberries.

Birk said that Magic was reviewing both Israeli and foreign companies. "There are places in the world where prices are reasonable. In the US, for example, prices are reasonable, but prices are higher in South America."

Asked last week whether Magic was itself an acquisition target, Bernstein said, "Maybe. We're not building a company to be acquired, but if an offer at the right price makes it way to us, we'll be happy to listen."

Formula Systems Ltd. (Nasdaq: FORTY; TASE: FORT) owns 50.5% of Magic. Sister company Sapiens International NV (Nasdaq: SPNS; TASE: SPNS) is also making mergers and acquisitions. The insurance services solutions developer is merging with two Israeli competitors, IDIT IDI Technologies Ltd. and FIS Solutions Ltd.

Magic's share price closed at $5.61 on Nasdaq yesterday, giving a market cap of $202 million, and fell 1% on the TASE today to NIS 18.90.

Published by Globes [online], Israel business news - - on May 23, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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