Wednesday September 26, 4:00 am Eastern Time

Formula Systems (1985) Ltd. to Acquire 37% of the Outstanding Ordinary Shares of Liraz Systems Ltd.

HERZLIYA, Israel, Sept. 26 /PRNewswire/ -Formula Systems (1985) Ltd., (Nasdaq: FORTY - news), a leading provider of information technology products, solutions and services, today announced that it has entered into an agreement with Discount Investment Company Ltd. and two of its wholly owned subsidiaries and Arie-Zeev Business Enterprise Ltd., a company controlled by Mr. Arie Kilman, (collectively, the "Sellers"), to purchase ordinary shares of Liraz Systems Ltd., an international software and services company publicly traded on the Tel Aviv stock exchange. Liraz has world wide operations through it's subsidiaries and affiliated companies, including:

• Level 8 Systems Inc. (Nasdaq: LVEL - news; "Level 8"), a U.S. company traded on NASDAQ, that specializes in business integration solutions which address the needs of knowledge workers, such as contact center agents and brokers, in vertical markets. Level 8 provides these capabilities through two main product lines: Cicero and Geneva AppBuilder.
  
  
• BluePhoenix Solutions, a Netherlands wholly owned subsidiary of Liraz, which has entered into an agreement to purchase, subject to certain closing conditions, the Geneva AppBuilder product line from Level 8.
  
  
• Level 8 Israel, a wholly owned subsidiary of Liraz, that sells and provides value-added services for Level 8's products in Israel.
  
  
• Advanced Systems Europe BV, a Netherlands wholly owned subsidiary of Liraz, providing consulting services for the creation and deployment of large scale application solutions for enterprise level accounts.

Under the agreement, Formula will purchase ordinary shares of Liraz, representing approximately 37% of its total share capital, for total cash consideration of approximately US$5,600,000. The Sellers have agreed that the directors appointed by them to Liraz's Board of Directors shall cease to serve as directors after the closing of this transaction. In addition, the parties agreed that under certain conditions and subject to the applicable law, Formula will have the right to purchase from the Sellers additional shares of Liraz. Formula has also granted the Sellers rights, under certain conditions, to participate in sales by it of Liraz shares.

Dan Goldstein, Chairman and Chief Executive Officer of Formula, said: "I have no doubt that the purchase of Liraz will fortify Formula Group by expanding its world-wide client base."

The agreement is subject to certain customary closing conditions and approvals.

Formula Systems (1985) Ltd. (Nasdaq: FORTY - news):
Formula Systems (1985) Ltd., is a global information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products and providing computer-based business solutions.

Cautionary Statement About Forward-Looking Statements:
Statements contained in this press release that are not historical facts are forward-looking statements subject to the risks and uncertainties as discussed more fully in Formula's filings with the Securities and Exchange Commission, including its most recent Form 20-F.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
Certain statements in this press release constitute forward-looking statements. Such statements involve various risks that may cause actual results to differ materially. These risks and uncertainties include, but are not limited to: successful consummation of the transactions contemplated in this press release, market demand for the companies' products, dependence on strategic partners, integration of new business, successful implementation of Formula's products, economic and competitive factors, international market conditions, management of growth, technological developments, the ability to finance operations and other factors which are detailed in Formula's Securities and Exchange Commission filings. Formula undertakes no obligation to publicly release any revision to any forward-looking statement.