On May 25 this year, the largest transaction in the history of the 3D printing industry was announced – the acquisition of Desktop Metal by Stratasys for USD 1.8 billion. Although formally it is to be completed in the fourth quarter of 2023, the parties clearly communicated that everything had already been “agreed” between them and, apart from formal issues, it had become a fact. Unfortunately for them, this spectacular merger did not appeal to the competition, which is trying to get in the game at all costs and torpedo the whole enterprise. On the one hand, we have a series of low-profile offers and declarations made by the Israeli Nano Dimension, which are no longer taken seriously, but on the other hand, we have Stratasys’ biggest competitor – 3D Systems, which has been trying to convince the company’s shareholders to reject the idea of absorbing Desktop Metal and instead agreed to let Stratasys be acquired by them.
This burgeoning corporate drama among the leaders in the 3D printing industry has many complex aspects. 3D Systems’ initial offer was rejected by Stratasys management on June 20. Today, 3D Systems has proposed a new, more competitive offer compared to the previous proposal, as well as the Stratasys merger project with Desktop Metal. The 3D Systems offering, based on a combination of a cash and stock transaction, is designed to convert each Stratasys common share into $7.50 cash and 1.3223 newly issued 3D Systems common shares. This revised offer would give Stratasys shareholders approximately 41% of the combined enterprise and $540 million in cash at the time of the transaction.
3D Systems’ offer is attractive to Stratasys shareholders for several reasons. The June 27 offering offers a Stratasys value per share of approximately $20, based on 3D Systems’ 10-day volume-weighted average price (VWAP). This represents a +33% bonus to the Stratasys share price at the close of May 24, 2023, which is the last day of trading in the shares before the announcement of the transaction with Desktop Metal.
Confidence of the deal also appears to be stronger for the 3D Systems offer as it does not require approval by the US Committee on Foreign Investment (CFIUS) or the International Trade in Arms Regulations (ITAR), unlike the proposed Stratasys-Desktop Metal deal.
Ultimately, 3D Systems’ proposal highlights the potential cost synergies and growth opportunities associated with combining the two companies. 3D Systems says the combination offers the potential to realize at least $100 million in cost savings through integrating R&D, optimizing sales and administration costs, and improving cost efficiency.
It is worth emphasizing that in any case this excludes an “agreed” transaction between Stratasys and Desktop Metal.
Regardless, the final decision rests with Stratasys shareholders, who will have to weigh the benefits and risks of both proposals. Nevertheless, given the story so far with Nano Dimension and the unequivocal statement issued by Stratasys on June 20, it does not seem that it can come to fruition…
Source: www.3dsystems.com