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Dan Goldstein, the founder of the Formula group, is regaining a controlling share of Formula Systems by re-acquiring the 10-percent stake Yaskal Holdings purchased last August. This follows his purchase of Shamrock's 9.7-percent stake in Formula on Wednesday for NIS 62 million.

A group headed by Rafi Peled and Aryeh Givoni acquired control of Yaskal last year as part of a series of acquisitions that included Feuchtwanger Investments and Mashav. The Peled-Givoni group gained a controlling share of Formula when Dan and Gadi Goldstein sold a 17-percent stake in the company for $68 million.

The deal signed last August included a $25 million payment in cash and $43 million in convertible securities that were to due in three years. The new agreement leaves Goldstein with the cash, but he will relinquish the securities in exchange for the 10-percent share. The new share distribution gives Goldstein control of over 20 percent of Formula's stock, while Yaskal will remain with a 15-percent stake.

Goldstein said yesterday that stock investors did not like the fact that someone else was controlling Formula and that this was reflected in the 20-percent plunge in the company's share price since the change in control was announced.

"An unstable situation was created, because the market prefers my brother, Gadi, and I as the leaders," Goldstein said, adding that the Peled-Givoni group was not out of the picture and that it would be integrated into a future constellation of controlling shareholders in Formula.

After mustering all of the financial resources of Yaskal and Feuchtwanger to acquire control of Formula, the Peled-Givoni group encountered opposition from several quarters. Minority shareholders in Formula group companies succeeded in blocking some of the Peled-Givoni group's plans at shareholders' meetings. Lawsuits were also filed against the Peled-Givoni group and some of its directors for allegedly acquiring control of Formula through illegal means. In addition, the stock market did not favorably regard Formula's new plans and the share prices of all of Formula's companies plunged by tens of percentage points.

Goldstein apparently became convinced that he needed to resume control of the group in order to stem the slide in share prices and boost Formula's image. Indeed, institutional and other investors showed little interest in buying Shamrock's 9.7 percent share of Formula when Goldstein sought a buyer for these shares in recent months. Goldstein was also harshly criticized by Formula shareholders after selling his shares to Yaskal last year and perhaps this also influenced him to revise the deal with Yaskal in order to re-gain control of Formula.

It is also possible that Goldstein assumed that Yaskal would not be able to come up with the $43 million it owed him and that he would, therefore, regain control of Formula in any event, after the three years had elapsed. Instead of waiting, however, he preferred apparently to step in now to try to minimize the damage.

Formula Systems (Nasdaq: FORTY; TASE: FORT) is a holding group of software firms that includes Magic, Crystal Systems, Liraz, Sivan, Matrix-IT, Sapiens, New Applicom and Sintec. Formula's stock price jumped 4.3 percent yesterday in Tel Aviv and was up over 2 percent in late trading in New York.