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Businessman Avi Wertheim has become a substantial shareholder in

Formula Systems

(Nasdaq:FORTY), after buying 1.5 million options convertible into a 12.8% stake, the company confirmed to TheMarker.

Earlier this month Wertheim, one of the owners of Mizrahi Bank, bought about 1.5 million or about 65% of the options Formula issued in its NIS 70 million debt offering. The options are convertible to shares by May 2003.

Wertheim's bought the options through Orwer, a privately-held company he controls. The move cost NIS 6 million.

The exercise price is NIS 75. Shares in the Formula software group today trade at NIS 50. The difference means that Formula shares have to rise by 54% to make the exercise worthwhile.

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From the perspective of Formula, Wertheim's purchase makes him a new player in the battle for control over the company. It also means that efforts by key shareholder Dan Goldstein to prevent further battles over the company were fruitless.

Formula shares have taken a beating over the last year because of the battles raging over control. To date, control is shared by the brothers Dan and Gad Goldstein, who hold about 21% of the company's shares; and Iscal, of the Peled-Givony group, which holds 9% - but that could be increased to 12.5%.

Wertheim holds several positions among publicly traded companies, although he has resigned as chairman of Mizrahi Bank. He serves as chairman of

BOS Better Online Solutions

(Nasdaq:BOSC). He was supposed to have invested about $2 million at a price of $2 per share, but backed off. He also serves as chairman of Alony Hetz, which is listed on the Tel Aviv Stock Exchange.

Capital market sources say that on the day of Formula's last issue, of options and convertible bonds, Goldstein and Wertheim competed over the options. Goldstein reportedly purchased 400,000 of them in order to avoid finding himself with more partners in the company.

"I don't know for certain that (the buyer is) Avi Wertheim, but if it is, I have no problem with that," Goldstein stated. He added that he doesn't believe the acquisition signals another battle for control over the company, merely an expression of faith in Formula by Wertheim.