Thursday October 4, 7:32 am Eastern Time

Magic Software Enterprises Announces Plans to Repurchase Up to $3 Million of Its Stock

OR YEHUDA, Israel--(BUSINESS WIRE)--Oct. 4, 2001--Magic Software Enterprises, Ltd. (Nasdaq:MGIC - news), a leading provider of state-of-the-art application development technology and business solutions, today announced that its board of directors has authorized the repurchase of up to $3 million of its shares of Common Stock.

In approving the stock buyback, the company stated that it believes its stock is significantly undervalued and represents an attractive investment opportunity as a result of current conditions.

"The board's decision reflects management's confidence in our company's future and its commitment to building shareholder value," said Menachem Hasfari, chief executive officer of Magic. "We also believe that Magic stock is significantly undervalued at the current time and represents an attractive investment given our portfolio of current business opportunities, our aggressive product development efforts, and our increasing penetration of key vertical markets."

Magic plans to repurchase the shares from time to time in the open market subject to, among other things, general market conditions and the market price of its ordinary shares, as well as the provisions of Israeli corporate law and U.S. securities law. Currently, an application to proceed with the stock repurchase plan is pending before the Israeli courts.

In addition, Magic will hold a shareholders meeting sometime this fall to obtain shareholder approval for the stock repurchase. Once all approvals have been received, the timing of any such repurchases will be at the discretion of the company, and Magic indicated that it will reassess its decision if the market price for its ordinary shares changes materially.

About Magic Software Enterprises
Magic Software Enterprises, a member of the Formula Group (Nasdaq:FORTY - news), ddevelops, markets and supports software development and deployment technology that enables enterprises to accelerate the process of building and deploying applications that can be rapidly customized and integrated with existing systems. Magic technology, applications and professional services are available through a global network of subsidiaries, distributors and Magic solutions partners in approximately 50 countries. The company's North American subsidiary is located at 1642 Kaiser Avenue, Irvine, Calif., 92614, telephone 949/250-1718, fax 949/250-7404 http://www.magicsoftware.com.

The Formula Group is an international information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products and producing computer-based solutions.

Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that may involve a number of risks and uncertainties. Actual results may vary significantly based upon a number of factors including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product conditions, both here and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in the company's most recent annual report and other filings with the Securities and Exchange

Contact:
Magic Software Enterprises, Irvine
Katharine Hanley, 949/250-1718 ext. 220
khanley@magicsoftware.com

or

Magic Software Enterprises, Ltd.
Guy Bernstein (Vice President, Finance)
+011-972-3-538-9224