Nano Dimension, an Israel-based manufacturer of 3D electronics printers, has formally offered to acquire Stratasys, the company founded by the inventor of FDM 3D printing. Nano Dimension CEO Yoav Stern has also taken to YouTube to warn against “lowball bottom feeders from Toronto” and the ongoing moves by activist investor Murchinson. Observers have linked the announcement by Nano Dimension, which comes ahead of a shareholder vote, to the recent appointment of Lazard as a Corporate Defense Advisor to the company in February. The purchase of Stratasys could be seen as a tactic to defend against the activist investor Murchinson.
The offer made by Nano Dimension to acquire Stratasys is $18 per share. Nano Dimension notes this is a 36% premium on the closing price of Stratasys as of March 1st, 2023. The proposed transaction has been put to the board of Stratasys and is confirmed by the company in a short statement saying, “it has received an unsolicited non-binding indicative offer from Nano Dimension Ltd”. The Stratasys statement continues, “Directors will carefully review and evaluate the proposal to determine the course of action that it believes is in the best interests of the Company and Stratasys shareholders.” Stratasys concludes that “Stratasys shareholders do not need to take any action at this time.”
Regular readers will recall the briefing from the 3D Printing Industry Executive Survey highlighting the opportunities for enterprises “sitting on sizeable cash balances” to acquire unvalued competitors. Shares in Stratasys during the past year have traded in the range of $11.04 to $27.64, with yesterday’s closing price at the lower end of that range at $14.01.
Nano Dimension is a 14.5% shareholder in Stratasys, becoming the largest shareholder in July 2022. At the time, Stratasys CCO Yonah Lloyd told 3D Printing Industry his company had implemented a limited duration Rights Plan, more commonly known as a poison pill, to “protect the company’s long-term interests and all Stratasys shareholders.” The Stratasys poison pill gives shareholders the right to acquire additional shares in Stratasys for a lower cost than an “acquiring person,” defined as a shareholder with a 15% or greater holding. The rights plan is set to expire on July 24, 2023.
Nano Dimension gives a rationale for the acquisition of Stratasys
The acquisition of Stratasys by Nano Dimension would be conducted for approximately $1.1 billion in cash. Nano Dimension has provided details of how they believe the business combination would be advantageous and highlights that Stratasys is a leader in premium polymer-based 3D printing systems, while Nano Dimension is a pioneer in 3D printing for challenging applications like electronics and high-performance components. The combination will create an unmatched platform with an unrivaled portfolio of additive manufacturing capabilities, complemented by new high-growth products. The combined company’s R&D capabilities will be ideally positioned to drive rapid innovation in 3D printing, including the deployment of Nano Dimension’s AI group. Combining capabilities will increase opportunities for deepening relationships with existing customers and acquiring new ones and provide cross-selling opportunities. Significant synergies will be created by streamlining the organization, improving cost structure, aligning overhead and go-to-market efforts, and combining R&D resources.
According to Nano Dimension, the proposed transaction represents a unique opportunity to create significant value for Stratasys management and employees. The combined company will be a leader in growth and profitability.
Yoav Stern, Chairman and Chief Executive Officer of Nano Dimension, summarises, “We have great respect for Stratasys’ business, including Chief Executive Officer Dr. Yoav Zeif, who we believe is the architect of Stratasys’ recent positive momentum. Together, Nano Dimension and Stratasys can offer an increasingly exciting set of solutions for customers while becoming better positioned to compete in the AME [Additively Manufactured Electronics] and AM industries. We believe this is an exceptional opportunity for all stakeholders – shareholders, customers, management, employees, and business partners – of both companies. In recent years the AM market has grown in size and accelerated remarkable technological advancement, and it is on the cusp of its next phase of development and growth. Bringing Stratasys and Nano Dimension together is about positioning both companies to succeed as a combined company and lead the industry into that next phase. With Nano Dimension’s strong culture of innovation and track record of successful merger integration, we expect to unlock significant value for all stakeholders. We look forward to continuing our discussions with Stratasys to reach a mutually acceptable transaction.”
A battle between Murchinson and Nano Dimension
Before the news today, Nano Dimension was subject to an activist investor’s takeover approach.
In February 2023, Murchinson, an investment firm with a then 5.1% holding in Nano Dimension, published an open letter to the shareholders of Nano Dimension expressing dissatisfaction with CEO Yoav Stern.
The Murchinson letter highlighted a string of acquisitions by Nano Dimension and criticizes the inorganic growth strategy. Nano Dimension has indeed been active in building a portfolio of acquired enterprises. Takeovers by Nano Dimension include NanoFabrica (Revenue: $10.5 million), Admatec/Formatec (Revenue: $5.3 million), Essemtec (Revenue: $29.7 million), Global Inkjet Systems (Revenue: $10 million), and DeepCube (not generating revenue at the time of acquisition).
Murchinson called for removing four directors, including Yoav Stern, from the Nano Dimension board and the placement of Murchinson-backed candidates Kenneth H. Traub and Dr. Joshua Rosensweig.
Nano Dimension responded to the initial letter on January 30th, 2023 saying, “Murchinson Ltd. request for a special meeting of the shareholders does not fit legal requirements and was Rejected by Nano Dimension.” Nano Dimension continued, “Given Murchison’s record of stock manipulations, violations of law and legal proceedings with United States regulatory authorities, the Board is committed to carefully examine any demand made by Murchinson as well as their conduct surrounding the Company in order to protect the rights of all of Nano Dimension’s shareholders and for the benefit of the Company.”
A follow-up press release from Nano Dimension on March 8th, 2023 with the subject, “Nano Dimension Highlights Serious Allegations Against Murchison Ltd.’s Owner, Marc Bistricer, by the Ontario Securities Commission (“OSC”)” made a list of claims “reiterating serious allegations made by staff of OSC in its case against Mr. Marc Bistricer (owner of Murchison Ltd.), his private holding company, Saline Investments Ltd. (part owner of Murchinson Ltd., “Saline”), and other market participants (together with Bistricer and Saline, the “respondents”) to hold them “accountable for an illegal and abusive short selling scheme that violated Ontario securities law and was contrary to the public interest.”
On this same day, Murchinson issued another press release entitled, “Murchinson Issues Letter to Fellow Shareholders Encouraging Them to See Through Nano Dimension’s Deceptive Scare Tactics and Make Their Voices Heard.” The press release continued, “Shareholders Should Ask Themselves Why the Yoav Stern-led Board Refuses to Address Murchinson’s Factual Arguments and Instead Continues to Hide Behind Threats and Attacks.” Murchinson also used the opportunity to tell shareholders that voting by Nano Dimension ADS holders would be cut off on March 13th ahead of the Special General Meeting of Shareholders planned for March 20th, 2023. No meeting is mentioned on the Nano Dimension website.
On March 9th, a press release by Murchinson referenced international proxy advisory firm, Institutional Shareholder Services Inc. (“ISS”), saying, “ISS has fully recognized change is urgently needed at Nano Dimension. It is clear that ISS – and we believe other shareholders – share many of the concerns we have expressed throughout our campaign about the Company’s alarming performance, governance and disregard for the best interests of the Company and its shareholders. Notably, the report spells out the culpability of Chairman and CEO Mr. Stern in black and white. ISS’s respected standing as both an expert in contested situations and as an objective third party should reinforce to shareholders that the call for change at Nano Dimension is the right one. As ISS notes, waiting means risking further value destruction. We strongly encourage fellow shareholders to vote today.”
In the press release, Murchinson notes, “Permission to quote ISS was neither sought nor obtained.”
In a statement made on March 9th, 2023, Nano Dimension says, “Nano Dimension vehemently disagrees with ISS’s recommendation. There is no valid meeting on March 20th, 2023, and Nano Dimension has not solicited any proxy cards. Therefore, we did not meet with ISS. Murchinson is attempting to convene an illegal meeting, thus disenfranchising retail shareholders that may not have had appropriate time to be notified and cast their votes. The ISS recommendation should be ignored, as it concerns an invalid shareholder meeting. We look forward to meeting with them to share our perspective, track record, and value creation strategy if and when a valid and duly called meeting will be held.”
Murchinson has also published a website called Save Nano Dimension to further articulate its proposals.
Nano Dimension had previously warned shareholders, “Do not follow the instructions made in Bistricer’s Murchinson’s Illegal Notice. As previously announced on January 30th, 2023, the demand by Murchinson and Mark Bistricer to call a special shareholders meeting was rejected due to the failure of Murchison to comply with the requirements set forth under the Israeli Companies Law for calling such a meeting. Similarly, the Illegal Notice is not compliant with the Israeli Companies Law and should be disregarded by shareholders.
Only The Company will inform its shareholders if and when a valid meeting will be held.”
The Nano Dimension CEO also took to YouTube on March 9th, 2023, to respond to “a Very Confused Shareholder (a/k/a Murchinson).” Over one hour and seventeen minutes, Chairman and Chief Executive Officer Yoav Stern explains the campaign by Murchinson and why Nano Dimension has issued press releases warning against voting, and how he is fighting against “lowball bottom feeders from Toronto” and the activist shareholder “game” they are playing.
You can watch the video here.
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Featured image shows a 3D printed PCB made by Nano Dimension. Photo via Nano Dimension.
