Stratasys moving forward with Desktop Metal merger, according to new filing

Is the Stratasys and 3D Systems merger still proceeding? A joint proxy statement filed by Stratasys with the SEC sets a date for a “Desktop Metal special meeting,” where the proposed merger between Stratasys and Desktop Metal will be voted on by shareholders. 

3D Systems and Stratasys representatives met on August 22nd and, “Stratasys representatives conveyed to the 3D Systems representatives particular areas of concern with respect to the proposed transaction and combined company, based on the results of the due diligence review undertaken by Stratasys, following the execution of the Stratasys-3D Systems NDA, and Stratasys’ evaluation of the latest 3D Systems proposal and a possible transaction with 3D Systems, and that the latest 3D Systems proposal was not itself a transaction which Stratasys would be prepared to enter into,” according to the SEC filing today.

“We cannot complete the Merger unless the Desktop Metal stockholders approve the Desktop Metal Merger Agreement proposal and the Stratasys shareholders approve the Stratasys Merger-related proposal,” states a letter to shareholders.

The letter signed by Yoav Zief and Ric Fulop adds, “The Stratasys board of directors unanimously recommends that Stratasys shareholders vote “FOR” each of the proposals to be considered at the Stratasys EGM.”

Yoav Zeif, Chief Executive Officer of Stratasys Ltd., and Ric Fulop, CEO of Desktop Metal, emphasized the importance of shareholder votes in the merger process. They urged shareholders to read the joint proxy statement/prospectus carefully, especially the “Risk Factors” section, to understand the implications of the merger.

Both CEOs expressed optimism about the merger and its potential to reshape the 3D printing industry. They believe that the combined strengths of Stratasys and Desktop Metal will drive innovation and offer enhanced solutions to customers worldwide.

It must be noted that the joint proxy statement filed with the SEC is subject to change and is not marked as complete.

According to the filing, as per the merger terms, each share of Desktop Metal’s Class A common stock will be automatically converted into 0.123 ordinary shares of Stratasys. This exchange ratio is fixed and will not be subject to market price fluctuations of either company’s shares.

Based on the closing price of Stratasys shares on Nasdaq on May 24, 2023, the value of the merger consideration for Desktop Metal stockholders was approximately $1.83 per share. Post-merger, Desktop Metal stockholders will hold approximately 41% of the combined company’s shares, while Stratasys shareholders will hold about 59%.

Both companies will hold meetings for their shareholders to vote on the merger. Stratasys will conduct an extraordinary general meeting where shareholders will vote on various merger-related proposals, including the issuance of Stratasys ordinary shares to Desktop Metal stockholders and the adoption of Stratasys’ amended articles of association. Desktop Metal will hold a special meeting for its stockholders to consider and vote on the merger agreement and other related proposals.

The Stratasys extraordinary general meeting of shareholders, or Stratasys EGM, will be held on Thursday, September 28, 2023. Desktop Metal, will hold a special meeting of its stockholders, the Desktop Metal special meeting, at 9:00 a.m., Eastern Time, on Thursday, September 28, 2023.

3D Systems and the “superior proposal”

The SEC filing also contains details of the Stratasys perspective on 3D Systems takeover proposal from July 13th. The section is quoted below:

“Stratasys has also received multiple unsolicited proposals from 3D Systems Corporation, or 3D Systems, to acquire Stratasys. While Stratasys’ board of directors initially determined that 3D Systems’ July 13, 2023 revised proposal (proposing to acquire Stratasys for $7.50 in cash and 1.5444 newly issued shares of common stock of 3D Systems per Stratasys ordinary share) would reasonably be expected to result in a “Superior Proposal” pursuant to the terms of the Merger Agreement, as of the date of this joint proxy statement/prospectus, Stratasys has communicated its concerns regarding the latest 3D Systems proposal to 3D Systems and that the latest 3D Systems proposal was not itself a transaction which Stratasys would be prepared to enter into. While Stratasys, 3D Systems and their respective management teams and advisors may engage in discussions, as of the date of this joint proxy statement/prospectus, the Stratasys board of directors has not determined that the latest 3D Systems proposal constitutes a “Superior Proposal” pursuant to the terms of the Merger Agreement and the Stratasys board has not changed its unanimous approval, recommendation and declaration of advisability of the Merger with Desktop Metal. The Stratasys board of directors strongly encourages you to vote in favor of the Stratasys Merger-related proposal at the Stratasys EGM, and to thereby enable the value-adding Merger with Desktop Metal.”

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Featured image shows Desktop Metal CEO ringing the opening bell at the NYSE in December 2020. Photo via Desktop Metal.