Nano Dimension in a dispute with its main shareholder – the backstage of the conflict…

At the end of January 2023, we reported that Nano Dimension – an Israeli listed company that produces specialized devices for the additive manufacturing of electronics and 3D printers printing from metals and ceramics, has implemented a plan of the so-called a “poison pill”, i.e. a shareholder rights plan designed to reduce the likelihood that any entity, person or group will take control of it. This was the result of actions taken by the main shareholder of the company – Murchinson Ltd., who, dissatisfied with the recent activities carried out by the management board of Nano Dimension, probed the possibility of taking over a controlling stake and replacing it with “independent managers”. Currently, the situation is stalemate, and Sam Davies from TCT Magazine sheds more light on the conflict behind the scenes.

Nano Dimension is a company listed on the American Stock Exchange. In terms of pure sales results, it has always been “very average”, although stock market players recognized that the company had great potential and invested over a billion dollars in it. Nano Dimension took full advantage of this by making a series of acquisitions last year – NanoFabrica, Global Inkjet Systems, Admatec/Formatec, Essemtec and DeepCube. The most sensational, however, was the acquisition of 12% of one of the market leaders – Stratasys, which resulted in the latter implementing its own “poison pill” to stop Nano Dimension from further buying its shares.

Thanks to all these transactions, Nano Dimension went into a phase of dynamic inorganic growth, but its share value fell. This caused the dissatisfaction of the company’s largest shareholder, Murchinson, who on January 22, 2023, requested the convening of an extraordinary meeting to allow shareholders to vote on draft resolutions to dismiss four current directors and appoint two of their independent directors. Nano Dimension felt that Murchinson could use the meeting to take control of the company and implemented the aforementioned “shareholder rights plan” instead.

Murchinson Ltd. is a global investment company founded in 2012. It owns 5.1% of Nano Dimension shares – more than any other single entity. The company is dissatisfied with Nano Dimension’s performance under Yoav Stern, who has been CEO since January 2020 and president since 2021. Murchinson points to the company’s share price dropping more than 77% under Mr. Stern’s leadership and suggests that under his leadership the company conducts poor capital allocation and has abysmal corporate governance. In his letter to shareholders, Murchinson points out that Nano Dimension’s share price over the past two years “has fallen 27% behind its only reported counterpart, Stratasys” and that “there are market concerns that Mr. companies”.

Nano Dimension believes Murchinson launched a “shocking smear campaign” last year to “harm the company and its managers.” As a consequence, it implemented a shareholder rights plan (more on this here).

Following Nano Dimension’s announcement of the rights plan, Murchinson said it only serves to reinforce his view that Nano Dimension’s board of directors is unfit to continue to lead the company. we believe this maneuver affected us, the poison pill is widely regarded as one of the most egregious anti-shareholder measures a company can take, especially when there is no detectable takeover threat. The board previously sought shareholder approval for a poison pill in July 2020, but the proposal was rejected.”

Murchinson also resented the issuance of nearly 52 million new shares, diluting shareholding. This action was taken so that the shares could be “reserved for issuance under the Nano Dimension Ltd employee stock option plan”, but Murchinson sees this as “a step towards illegally tipping the scales of any future shareholder vote by placing these shares in the hands of Mr Stern’s allies, including many who work in the company.”

As reported by Sam Davies, once the shareholder rights plan is in place, Nano Dimension appears determined to stop Murchinson from making any changes for at least 12 months until the rights plan expires, or at least until more than 10% of the outstanding shares are purchased. Murchinson states that he will continue to make “good faith” efforts to resolve outstanding issues and to “arrange a special meeting as soon as possible.” But he refused to rule out legal avenues if the Stern-controlled board continued to restrict their rights.

“We are ready to invest whatever resources and time are needed to accelerate board changes for the benefit of all Nano Dimension shareholders and stakeholders. Murchinson can’t be stopped.”

Source: www.tctmagazine.com