It seems possible! Stratasys officially enters talks to merge with 3D Systems! But Nano Dimension doesn’t let go…

We continue our series of articles about the year-long struggle to take control of Stratasys. Concluding last week’s article describing, among others, about the vote of confidence in the current supervisory board of Stratasys scheduled for August 8, 2023, I wrote that “I am more than sure that something will happen in the meantime.” And it happened … First, 3D Systems made another takeover bid for the company for the amount of $ 2 billion, Stratasys announced that it was actually worth considering, Nano Dimension once again conquered its takeover offer, and Stratasys once again firmly rejected it . What is most interesting about all this, however, is that regardless of the further development of the situation, the merger of Stratasys with Desktop Metal is starting to be more and more threatened …

We start at the beginning… last Thursday, July 13, 2023, 3D Systems made a new $2 billion bid to acquire Stratasys. In addition, the company agreed to pay penalties for terminating the agreement with Desktop Metal, if the agreement was accepted. Under the offer, each Stratasys share would be converted to $7.50 in cash and 1.5444 shares of the combined companies, giving Stratasys shareholders approximately 44% of the combined company’s shares and approximately $540 million in cash. 3D Systems says the transaction assumes a total value of the proposed combined company of approximately $2 billion, including $100 million in cost synergies.

The amount of cash offered is the same as in the previous two offerings, however, the number of shares offered has increased. The initial offer from May 30 offered approx. 40% of the combined company, and the increased offer in June 41%. The company claims that the new offer represents a +15% improvement over the original proposal. 3D Systems also provided Stratasys with a signed merger agreement in escrow. The agreement sets out the details of the merger and will be filed on Form 8-K with the SEC by 3D Systems as required.

What is important (and perhaps encouraging for Stratasys management?) 3D Systems has offered to take all contractual penalties for terminating the agreement with Desktop Metal. Thus, beyond any doubt, the idea of a merger of both companies with the simultaneous merger of Stratasys and 3D Systems is rejected.

On Monday, July 17, 2023, Stratasys announced that the board, after consulting with its financial advisor and external legal counsel, “unanimously determined” that the new offer from 3D Systems meets the conditions of “better” than the potential from Desktop Metal and intends to enter into discussions with 3D Systems. At the same time, the company emphasized that “there is no certainty” that the talks with 3D Systems will end with a “beneficial proposal”, contract or transaction. At the same time, the Stratasys board unanimously rejected the latest Nano Dimension proposal, going so far as to say that the company’s CEO, Yaov Stern, is not a trustworthy person and “is not qualified to manage Stratasys.”

A day later, Nano Dimension announced another increase in the purchase price of Stratasys shares. The offering was raised from $24 per share to $25, representing a 233% premium over the cash portion of 3D Systems’ offering and a 93% premium over the stock price. By comparison, 3D Systems’ offer is $24 a share of Stratasys.

At the same time, Nano Dimension has threatened that if its offer is not accepted, it intends to review its investment in Stratasys, including the possible sale of all its 14.1% shares on the open market. Nano Dimension hopes that this information will reduce the attractiveness of 3D Systems’ offer.

Of course, the company also criticized the 3D Systems offer as misleading and inconsistent with the “best interests of Stratasys shareholders”, citing the high uncertainty of the share price and risk. Based on the 30, 60, 90 and 180-day weighted average share price, 3D Systems’ offer is expected to be worth just $22 per share, well below Nano’s $25.00 cash offer. The company also opposes the proposed combination of Stratasys with Desktop Metal, which it considers highly overvalued.

So, summarizing the events of the past week:

• 3D Systems is determined to merge with Stratasys, even at the cost of paying contractual penalties for breaking the contract with Desktop Metal
• Stratasys, willy-nilly, has to sit down to talks, due to the pressure of its shareholders (which I wrote about in last week’s article), as well as the decision-making responsibility resulting from the fact that it is a joint-stock company; if the offer of 3D Systems is assessed by independent auditors as better than the idea of merging with Desktop Metal, it cannot reject it, e.g. for ambitious reasons or having a “different vision of the world”
• Nano Dimension has rather fallen out of the game for the triumvirate of power over the 3D printing industry – 3D Systems did not pick up on them in its takeover proposal and the company seems to be still alone in its fight to acquire Stratasys
• hardly anyone looks at Desktop Metal seriously; the company is seen more as a “problem to be solved” than any viable marketable option.

However, this does not change the fact that the possible merger of Stratasys with 3D Systems would cause a gigantic reshuffling of the 3D printing market, which would translate into the entire distribution network in individual countries (I wrote more about it in last week’s article). It is still uncertain whether Stratasys sees the idea of merging with 3D Systems as a real possibility, or whether it is putting on a good face as it continues to strive to acquire Desktop Metal – and above all keep its business under full (current) control?

Source: www.3dsystems.com & www.stratasys.com & www.nano-di.com
Photo: www.pixabay.com