Stratasys still playing hard to get

The soap opera around Stratasys and the various suitors competing for its attentions has taken yet another turn as all the players argue about which offers the best dollar return.

The story so far. Nano Dimension has made repeated and unwanted offers to acquire Stratasys, which Stratasys politely declined. As Nano Dimension became more aggressive, Stratasys become less polite until eventually Nano Dimension gave up. In the meantime, Stratasys set up a deal to acquire Desktop Metal. Then 3D Systems tabled an offer to buy Stratasys. After a small amount of flirting, the Stratasys board decided that 3D Systems wasn’t serious and recommended its shareholders vote for the original deal with Desktop Metal.

Now, in the latest twist, that deal has collapsed as the shareholders appear to have voted against it. That leaves the board of directors in an awkward position since they recommend this union. And yet it’s not surprising since 3D Systems continued to argue that its deal would offer more value to the Stratasys shareholders, while Nano Dimension, which remains the largest shareholder in Stratasys, announced from the start that it would oppose the Desktop Metal deal. 

Dov Ofer, Chairman of Stratasys’ Board of Directors, announced: “We have decided to undertake a comprehensive and thorough review of all available strategic alternatives.” Stratasys has said that it will explore all strategic options, including “a strategic transaction, potential merger, business combination or sale” but warned that this might not lead to any transaction or other strategic outcome.

Additionally, Stratasys has extended its Shareholder rights plan for three months, essentially a poison pill, to limit the risk of another player taking advantage of the situation with a hostile takeover.

Naturally 3D Systems immediately suggested that the shareholders rejection of Desktop Metal was really a vote in favour of taking the 3D Systems’ offer. The most recent offer from 3D Systems is for $7 in cash for each Stratasys share plus ownership of 46% of the aggregate shares of the combined company. This is due to expire on 5th October but the company has said that it’s willing to offer Stratasys a 60-day ‘go-shop’ period to look for a better offer. 

Dr. Jeffrey Graves, president and CEO of 3D Systems, pointed out: “This amendment reflects our confidence in the superior value of our proposal and our belief that the market has already had more than enough time to evaluate interest in Stratasys, which has already yielded ten offers for Stratasys in the last six months.”

Graves also noted: “We continue to believe that a combination between 3D Systems and Stratasys presents the most attractive opportunity for Stratasys shareholders and the additive manufacturing industry at large, given the massive opportunity for scale and synergy realization.”

In the midst of this, 3D Systems is having to replace its chief financial officer after Michael Turner, the current CFO, announced that he was leaving to pursue an alternative job. Andrew Johnson, 3D Systems’ executive vice president, chief corporate development officer, and chief legal officer, will take over as interim CFO, when Turner leaves on October 16.

As for Desktop Metal, its shareholders did vote in favour of the deal with Stratasys. That’s not surprising since its generally accepted that Desktop Metal overstretched itself and the merger with Stratasys would have offered a quick boost to the shareholders. Instead the company will have to go back to its original plan to save costs as Ric Fulop, founder and CEO of Desktop Metal, stated: “Our plan to reduce costs and generate revenue remains on track as customers continue transitioning to our AM 2.0 technologies for mass production of metal, polymer, ceramic and health products.”

So far it doesn’t appear that anyone has gained anything out of this mess apart from the various lawyers and bankers advising all the companies involved. Nano Dimension is still fighting off a takeover attempt from its largest shareholder, Murchinson, which arguably kickstarted this whole affair. Stratasys may feel that it doesn’t need to merge with anyone now that the threat from Nano Dimension has receded. Then again the merger with Desktop Metal would have helped Stratasys expand into metal printing, one of the few areas where it’s lacking, though the board was not able to persuade its shareholders of this. Instead the proposed deal simply exposed the weakness in Desktop Metal’s position. And Stratasys itself is now having to expend considerable funds and effort to cope with all this attention.

You can find further details on all the various players in this saga from stratasys.com, nano-di.com, desktopmetal.com and 3dsystems.com.


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