Formula Systems (1985) Ltd ADR Dossier
Qualitative Analysis
Business overview
Formula Systems (1985) Ltd. (Nasdaq and TASE: FORTY) is a global information technology holding company headquartered in Or Yehuda, Israel. The company operates through a network of subsidiaries and affiliates, providing software consulting services, computer-based business solutions, and developing proprietary software products. Formula Systems maintains controlling and significant equity stakes in several prominent IT entities, including Matrix IT Ltd. (which completed a reverse triangular merger with Magic Software Enterprises Ltd. in February 2026, making Magic a wholly owned subsidiary of Matrix), Michpal Technologies, TSG IT Advanced Systems, and others. Following the completion of Sapiens International Corporation's acquisition by Advent in late 2025, Formula Systems transitioned its Sapiens holdings to a minority indirect stake of 18.68%, classifying Sapiens' historical results as discontinued operations.
Research as of 20 Jun 2026
Strategic Initiatives
Growth programs, investments, and their expected impact
The reverse triangular merger of Matrix IT and Magic Software, making Magic a wholly owned subsidiary of Matrix.
Expected impact: Positions the combined entity among the world's leading publicly traded IT services companies, expanding technological capabilities and U.S. market presence.
Shifting the group's product mix toward high-margin proprietary software, cloud-native SaaS, and AI-integrated platforms.
Expected impact: Targeting EBITDA margin expansion of 100–150 basis points through 2026 via improved operating leverage.
Mergers, Acquisitions & Partnerships
Recent deals and strategic collaborations
Recent Acquisitions
Acquired by subsidiary Michpal Technologies to strengthen its payroll, HR, and financial solutions.
Financial impact: Expected to expand Michpal's revenues and profits across its business segments.
Acquired by affiliate TSG IT Advanced Systems, specializing in spatial detection and mapping.
Financial impact: Strengthens TSG's position as a leading provider of integrative, end-to-end defense technology solutions.
TSG signed an agreement to acquire Production Floor, a provider of end-to-end manufacturing and integration services primarily for defense customers.
Financial impact: Aims to accelerate TSG's AI-based capabilities and defense technology offerings.
Strategic Partnerships
Following Advent's acquisition of Sapiens, Formula retained an 18.68% minority stake in Sapiens' ultimate parent company (SI Swan UK Topco Limited) to participate in Sapiens' long-term AI and SaaS transition [1.2.3].
Terms: Sapiens was valued at $2.5 billion ($43.50 per share in cash). Formula realized a capital gain of approximately $570 million from the transaction.