Some of the biggest names in additive manufacturing are about to merge — we’re just not entirely sure who. One name we can say for certain is Stratasys — long one of the top names in 3D printing. As for with whom the company will eventually merge, there are three top candidates: Desktop Metal, 3D Systems and Nano Dimension.
Stratasys’ preference has long been leading metal 3D printing firm, Desktop Metal. The company has thus far been far less interested in engaging with competing bids. There has been some movement on that front, however. Today Stratasys announced that its board has unanimously rejected Nano Dimension’s offer.
The company says the offer is, “misleading, coercive, substantially undervalues the Company as a whole and is NOT [emphasis theirs] in the best interests of all Stratasys shareholders.” A statement about the deal doesn’t pull any punches.
“Nano has destroyed significant value and trades at negative firm value,” the company writes. “Yoav Stern, Nano’s CEO, cannot be trusted, has made misrepresentations about Stratasys and is not qualified to manage Stratasys. Since Yoav Stern’s appointment, Nano has spent more than $500 million in cash and increased its revenue by only $44 million.”
Nano Dimension, meanwhile, has suggested that Stratasys go ahead and replace the aforementioned shareholders. It writes:
The actions of the current Stratasys Board of Directors have raised significant concerns about their practices and lack of commitment to shareholder interests. Six of the eight directors have spent an alarmingly long time together on the Board, suggesting a lack of new perspectives and fresh ideas, not to speak about obvious years of “one-hand-washes-the-other” issues. They have demonstrated a blatant disregard for shareholders’ interests and resistance to change. Attempts to add a new independent director as recently as 2-3 years ago were met with pushback. While a new director joined the Board in 2020, he was ousted barely a year later in 2021 following some self-serving corporate governance maneuvers geared at maintaining the underperforming status quo and the mummified Board’s grip on power.
Stratasys also announced today that it plans to entertain 3D Systems’ counteroffer. “Stratasys intends to engage in discussions with 3D Systems with respect to 3D Systems’ July 13, 2023 revised proposal, subject to the requirements of the Desktop Metal merger agreement,” the company notes.
“We are pleased with the Stratasys Board’s determination. We anticipate prompt termination of the Desktop Metal merger agreement and countersignature of the agreement to combine 3D Systems and Stratasys so that we can deliver our collective stakeholders the unparalleled benefits of the envisioned combined company,” says 3D Systems CEO Jeffrey Graves. “Together, 3D Systems and Stratasys are well-positioned to capture the benefits of scale needed to lead in the additive manufacturing industry and deliver long-term profitable growth. We reiterate our confidence in the strength of the combined financial profile of 3D Systems and Stratasys, including our ability to realize $100 million of synergies jointly identified by our two management teams during due diligence exercises in September 2022.”
Nano Dimension, which already owned 14.5% of outstanding Stratasys shares, set the wheels in motion in early March by announcing a bid to acquire Stratasys for around $1.1 billion. In May, Stratasys announced plans for a merger that would find it owning 59% and Desktop Metal owning 41% of the combined company.
“Today is an important day in Stratasys’ evolution,” Stratasys CEO Yoav Zeif said at the time. “The combination with Desktop Metal will accelerate our growth trajectory by uniting two leaders to create a premier global provider of industrial additive manufacturing solutions. With attractive positions across complementary product offerings, including aerospace, automotive, consumer products, healthcare and dental, as well as one of the largest and most experienced R&D teams, industry-leading go-to-market infrastructure and a robust balance sheet, the combined company will be committed to delivering ongoing innovation while providing outstanding service to customers.”
3D Systems threw its hat in the ring in June. Stratasys rejected the counter bid. At the end of the month, the Donerail Group, which owns 2.3% of Stratasys, wrote a letter to the board of directors urging serious consideration of the offers.
“As the Company disclosed in a June 20th regulatory filing, since January of 2021, Stratasys has been on the receiving end of at least 12 unsolicited acquisition proposals from at least three separate bona fide acquirers,” the investment firm wrote. “We also believe that the Board would receive additional acquisition interest if it would indicate a willingness to seriously entertain it. Implied acquisition premiums of the disclosed 12 unsolicited acquisition proposals have been attractive, with one proposal exceeding over 60% from the trading price at the time of the offer. In 11 of those 12 unsolicited acquisition proposals, Stratasys rejected the unsolicited proposal without engagement. Such blind and inconceivable rejections have cost Stratasys shareholders dearly.”
Stratasys’s own growth has been due, in part, to some strategic M&As over the years. The company merged with competitor Objet in 2012 and acquired prominent desktop 3D printing firm MakerBot the following year.