Mergers make Matrix one of Israel's biggest employers

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For many years the IT services and consultancy sector in Israel has been one of the most active in terms of mergers and acquisitions.

Following recent mergers Israeli IT services and consultancy company Matrix (TASE: MTRX) has become one of Israel's biggest employers with 12,500 employees, including 10,682 in Israel at the end of the third quarter. That's most employees than Intel Israel, which was for many years until recent layoffs Israel's biggest private employer. Only Elbit Systems Ltd. (Nasdaq: ESLT; TASE:ESLT) with 14,000 employees and Shufersal Ltd. (TASE:SAE) have more employees. 52% of Matrix's employees are women.

Matrix, under CEO Moti Gutman and controlled by Formula Systems (TASE: FORTY), has recently announced three acquisitions: US company Alacer, which provides IT consultancy services for big companies in the US including Citi and Toyota, for several million dollars; Israeli company Ortec Marketing Equipment & Supply, which manufactures and markets equipment for the electronics and chip industry, was acquired in early December; and last week Haifa-based Gav Systems and Gav Express, which provide a range of IT solutions including technology development, consulting and outsourcing, for NIS 45 million. The latter acquisition added 850 employees to Matrix's fast expanding workforce.

For many years the IT services sector in Israel has been one of the most active in terms of mergers and acquisitions. The biggest companies in the sector including Matrix, Hilan (TASE: HLAN), One Software Technologies (TASE: ONE) and Malam-Team (TASE: MLTM) have made many acquisitions, mainly of small companies in the field, bringing in more and more business and employees.

But in recent years, there has been a lull in the number of mergers and acquisitions, but some recent moves may indicate a renewed appetite among the giants of the field. At this point, most of the activity is coming from Matrix, by far the biggest company in the sector in Israel, although earlier this month One Technologies acquired Bezeq Online from Bezeq for NIS 50 million and Hilan acquired Israeli and Bulgarian companies for NIS 86 million.

At the beginning of the year One had 7,052 employees, with 2,400 more employees added through the acquisition of Bezeq Online, Hilan has 5,360 employees and Malam Team has 4,818 employees.

The IT market encompasses a wide range of fields, from computing infrastructures, through software solutions for organizations, payroll management and human resources. The revenue of the four leading companies in the industry amounted to about NIS 12 billion in January-September of this year, of which Matrix's share was approximately 35%. The company reported a handsome 7.5% rise in revenue, while net profit since the beginning of the year has jumped by 19% to NIS 203 million. Matrix is currently traded at a market cap of over NIS 5.6 billion, after the company's share price jumped by 31% over the past year. The return on the share price of Hilan, the second largest company in the industry (with a market cap of NIS 5.3 billion), was lower, at 22%.

One Technologies and Malam Team shares yielded much higher returns of 52% and 68% over the past year, respectively. The Tel Aviv 125 index, which includes these four computing giants, rose by 28% during this period.

Published by Globes, Israel business news - en.globes.co.il - on December 19, 2024

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