Following Israel’s Mashov Computers Ltd’s shareholders’ rejection of the Shamrock Group’s attempt to buy a controlling share in Mashov’s daughter company, Magic Software Enterprises Plc, Mashov, Formula Systems Ltd and Magic itself have finalized a complex deal that will insure that control of Magic remains with Mashov and Formula. Formula will buy 800,000 shares at $5 each that will give it a fully diluted holding of almost 12% in the company. In addition it will have an option to increase their future share in the company to just over 25%. Mashov has agreed not to buy Magic shares for the next three years and will give Formula first refusal on any shares it sells. Similarly, should Formula sell Magic shares, Mashov will get first refusal. Mashov has also agreed not to sell shares until Formula exercises it’s further purchase option thus ensuring control of Magic by Mashov and Formula over the whole period of the deal. The cash boost will be welcomed at Magic due to its poor results last year in which it reported losses of $10.5m mainly due to company re- organization and difficulties breaking into key markets.
