Formula has signed a deal to acquire Zap and will pay NIS 240 million in cash

Formula Group has signed a deal to acquire Zap. Formula will pay NIS 240 million in cash and an additional NIS 60 million, subject to Zap meeting its profit targets.
For Zehavit Cohen, director of the Apax Fund, who thought she could issue Zap at a value of NIS 600-750 million, this is a huge loss of potential, since the transaction is made at a value lower than Zap's value in the Apax Fund reports in 2019 by NIS 400 million. In 2015, Apax acquired 90% of Zap, which owns price comparison sites, for $ 35 million.
The corona plague and the closure of the market, which led to the collapse of small and medium-sized businesses, put Zap in a crisis and it was required to adapt its activities to market conditions this year and laid off about a quarter of its employees - 450 people.
This is the price of the books in which Zap was valued in the fund's reports in 2019, before the crisis. This is not the first time Cohen has put Zap on the shelf for sale - in 2018 Cohen tried to issue Zap on the stock exchange at a value of NIS 650-700 million, according Three of the value at which it was acquired, but the issue fell due to institutional estimates that Zap's value does not exceed NIS 400 million.
Guy Bernstein, CEO of Formula Systems, said following the closing of the deal: “The acquisition will be another step in Formula's activities to provide and market various digital solutions to companies and small and medium-sized businesses. We will work to create a synergy between the activities of Zap Group and other activities in the Formula Group - in the first phase, in the Israeli market, and later we will also examine the expansion of the activity overseas. "
For Formula Systems, this is an interesting deal - the group is one of the largest software groups in Israel, engaged in providing software consulting services, developing proprietary software products and providing computer-based business solutions. The group owns the public companies Matrix (49%), Sapiens (44%), Magic (46%) - as well as the private companies Michpal (100%), Isink Staffink Solutions (90.09%), Ofek Aerial Photography (80%) and T. SSG (50%).
Formula's revenues rose during the Corona crisis: In 2020 reports, the group posted record revenues of $ 1.93 billion - about 13.7% more than in 2019. The company's operating profit jumped 23% to a record $ 171 million, and net profit rose by about 21% to $ 47 million, compared to $ 39 million in 2019.
Thus, the group's value soared to NIS 4.57 billion. About $ 533 million remains in Formula's coffers, and with the help of financial flexibility, the group can embark on new adventures of mergers and acquisitions.
The Zap Internet Group, led by Rami Hazan, was founded in 1968 by the Maurice Kahn Artery Group, under the name "Yellow Pages", and initially engaged in advertising and marketing businesses using printed guides. Since the middle of the previous decade, Zap has expanded its activities in the field of advertising and marketing to businesses through the operation of websites. It currently owns the Zap price comparison site, Rest restaurant sites, Zap Marriage sites, Zap Doctors, Zap Travel, Zap Yellow Pages and others.