As we previously reported, it appears increasingly likely the 3D Systems / Stratasys merger proposal will go through. 3D Systems is certainly keen to get things across the line, and while stopping short of running a victory lap around Rehovot, a rather triumphant missive sets a “target date of August 4 for the completion of due diligence and merger agreement discussions with Stratasys.”
But wait. Stratasys insists that things may not, in fact, be moving at such a hasty pace. Indeed, it is claimed 3D Systems is withholding information required for the rigorous scrutiny the deal demands. Let’s take a look at the latest developments.
3D Systems on the Stratasys merger
“We are pleased that through these initial discussions, we have been able to increase our estimated cost synergies. The value of this combination is clear and our binding proposal represents a significant premium to Stratasys shareholders,” said Dr. Jeffrey Graves, President and CEO.
3D Systems has announced a target date of August 4, 2023, for the completion of due diligence and merger agreement discussions with Stratasys. This follows the announcement on July 17, 2023, by the Board of Stratasys that the 3D Systems’ binding offer of July 13, 2023, would likely result in a ‘Superior Proposal’ as defined in Stratasys’ merger agreement with Desktop Metal, Inc.
Graves said, “Our job now is to move quickly to realize that value. It is now two weeks ago that the Stratasys Board determined that our binding offer is reasonably likely to result in a superior alternative to the Desktop Metal merger. We are fully committed to engaging with Stratasys to complete the reciprocal due diligence processes. In addition, we stand ready to hammer out a definitive agreement reflecting the form and amount of merger consideration that served as the basis for the Stratasys Board determination two weeks ago. We believe that we can complete these processes in another eight days at most, and have set August 4 as a target date.”
3D Systems has confirmed that the form and amount of merger consideration offered by 3D Systems on July 13 for each Stratasys share is the Company’s best and final proposal. Each Stratasys share will convert into $7.50 in cash and 1.5444 shares of the combined company, representing ownership by the Stratasys shareholders, in the aggregate, of approximately 44% of the shares of the combined company, in addition to the approximately $540 million of aggregate cash consideration being offered.
3D Systems has increased its initial projections and is confident that it will be able to deliver cost synergies of at least $110 million compared to its prior estimates of $100 million. The merger agreement that 3D Systems submitted on July 13 contains a number of provisions for the benefit of Stratasys shareholders that are absent from the Desktop Metal merger agreement.
Stratasys update on 3D Systems merger plans
Stratasys has responded to 3D Systems’ press release, stating that contrary to 3D Systems’ claims, Stratasys has been proactive in providing data and conducting management meetings. However, Stratasys claims that it is still waiting for reciprocal information from 3D Systems, including their assessment of potential negative revenue synergies and detailed cost synergy analysis. “While 3D Systems has provided some cost synergy analysis, it’s only high level and lacks critical details that would substantiate their cost synergy claims,” states Stratasys.
Stratasys also noted that 3D Systems has declared their public proposal of July 13, 2023, as their “best and final proposal” regarding the form and amount of merger consideration. Stratasys expressed uncertainty about when and why 3D Systems’ stance on negotiation changed. Regardless, Stratasys’ Board will evaluate all proposals holistically, considering necessary due diligence and analysis, including regulatory analysis.
Stratasys expects to determine whether 3D Systems’ proposal or any revised proposal, represents a Superior Proposal once 3D Systems provides the requested due diligence information. Stratasys and its Board of Directors expect 3D Systems to engage constructively as part of Stratasys Board’s efforts to maximize value for all Stratasys shareholders.
Nano Dimension to decide on next move
Nano Dimension has withdrawn its plans to take over Stratasys. Yoav Stern, Chairman and CEO of Nano Dimension, explains, “We began our efforts to structure a friendly transaction with Stratasys with a clear focus on generating value for both companies’ shareholders. While we continue to believe that a combination of our companies has both strategic and financial merit – particularly given our offer provides far more certainty and guaranteed immediate $25 per share all-cash value, better than any other alternative currently available to Stratasys shareholders – this idea was rejected by an entrenched Stratasys board intent on manipulating the facts and preventing its shareholders from making their own decisions regarding our offer. We believe that our efforts to convince a sufficient number of Stratasys’ shareholders that their entrenched board will continue its track record of leading the company toward new disasters has fallen short.”
The Nano Dimension CEO added, “Most of the investors of Stratasys have clearly indicated to us that the potential overhang of the shareholder rights plan (“poison pill”) makes tendering their shares too risky, in spite of our superior $25 all-cash per share offer. The Stratasys board’s stance makes it clear that the poison pill is there to stay and will continue to block shareholders from having an opportunity to tender their shares. Furthermore, a timely declaratory judgment regarding the poison pill by the Israeli Court – thanks to Stratasys’ request of the Judge – will not occur until late in this fall, long after the expiration of Nano’s special tender offer. Finally, replacing a majority of Stratasys’ entrenched board will not be achievable. Taking all this into account, we intend to “stand down” on Stratasys. We shall continue with our alternative active M&A plans.”
In a concluding statement, Stern said, “We intend to review our investment in Stratasys, including a possible sale of all our existing 14.1% holdings in the open market. We see significant alternatives ahead in a highly fragmented industrial markets’ landscapes, and we expect to leverage the strength of our financial position and growth product & technologies in AME, AM, Materials, Ink Services and Additive Electronics as we pursue our backlog of M&A opportunities and expect to maintain the organic growth (approximately 50% over the last 4 quarters) and drive shareholder value.”
Desktop Metal has yet to comment on the developments.
What does the future of 3D printing for the next ten years hold?
What engineering challenges will need to be tackled in the additive manufacturing sector in the coming decade?
To stay up to date with the latest 3D printing news, don’t forget to subscribe to the 3D Printing Industry newsletter or follow us on Twitter, or like our page on Facebook.
While you’re here, why not subscribe to our Youtube channel? Featuring discussion, debriefs, video shorts, and webinar replays.
Are you looking for a job in the additive manufacturing industry? Visit 3D Printing Jobs for a selection of roles in the industry.
