By Sarina Isaacs

Shares of Magic Software climbed after the IT-consulting services company said it agreed to negotiate a merger deal with IT-services firm Matrix.

Magic also reported higher fourth-quarter earnings and raised its semiannual dividend.

The stock climbed 7% to $13.75 in midday trading after hitting a 52-week high of $14.04 earlier in the session. Shares are up about 30% over the past year.

Magic said late Monday that it and Matrix agreed, in a memorandum of understanding, to negotiate a merger deal in which Magic becomes a private company wholly owned by Matrix by way of a reverse triangular merger.

Formula System is considered the controlling shareholder for both Israel-based companies, Magic said.

Magic said the companies anticipate the combined entity's aggregate market value at $2.1 billion, and that it is expected to operate in about 50 countries.

Magic added that the consideration to its shareholders will be in the form of Matrix shares based on an exchange ratio derived from company valuations, to be determined by an independent committee appointed by Magic's board.

Separately, Magic on Tuesday reported fourth-quarter earnings, saying it earned $10.6 million, or 22 cents a share, compared with $8.5 million, or 17 cents a share, a year earlier.

Adjusted income attributable to Magic holders totaled 93 cents a share, and revenue came to $142.6 million, up 13.6% from a year earlier.

Magic Software's board also declared a semiannual dividend of 32.7 cents per share, up from its last semiannual dividend of 23.6 cents a share. The dividend is payable May 7 to shareholders on April 22, the company said.

Write to Sarina Isaacs at sarina.isaacs@wsj.com

(END) Dow Jones Newswires

March 11, 2025 11:56 ET (15:56 GMT)

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