Magic Software Enterprises Ltd. (Nasdaq: MGIC; TASE: MGIC) is raising $35 million from a number of Israel investment institutions and Formula Systems Ltd. (Nasdaq: FORTY; TASE: FORT), its controlling shareholder. Magic announced the financing round today, in which it is issuing 3.2 million new shares to the investment institutions and 1.1 million more shares to Formula. The share offering amounts to just under 10% of Magic Software's share capital. Following the offering, Formula's stake in Magic Software will fall from 47.1% to 45.3%.
Sources inform "Globes" that the investment institutions that took part in the offering are Menorah Mivtachim Holdings Ltd. (TASE: MORA), Yelin Lapidot, The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5), Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), and Psagot Investment House Ltd.. Some of them are already parties at interest in Magic Software: Phoenix has a 6.2% stake, Yelin Lapidot 5.8%, and Clal Insurance 5.2%. Barak Capital Underwriting was the underwriter for the offering.
The share price for the offering was $8.20, a 5.2% discount on yesterday's price at the close of Nasdaq trading. Magic Software's market cap is $385 million, following a 10% rise in the share price over the past year. Magic Software, which develops and markets software development and integration tools, is managed by CEO Guy Bernstein; Bernstein also manages parent company Formula, whose market cap is $531 million. Formula is also a shareholder in software company Sapiens International NV (Nasdaq: SPNS; TASE: SPNS) and computer services company Matrix IT Ltd. (TASE:MTRX). The largest shareholder in Formula is Asseco Poland S.A. with a 26.3% of the shares.
As the end of the first quarter, Magic Software had $87.6 million in cash. Magic Software VP mergers and acquisitions and general counsel Amit Birk explains the rationale behind the company's current financing round: "In general, the offering has two purposes. The first is continuation of investment in our products in order to always have advanced products in the market. The other is that we're considering acquisitions, some of them Israeli companies in technology and services that will be synergetic with our activity."
Published by Globes [online], Israel business news - www.globes-online.com - on May 29, 2018
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