3D Systems, the global leader in 3D printing, has launched a takeover bid for Stratasys, an Israeli 3D printing company. This follows a long-standing takeover bid for the company by fellow Israeli 3D printing company Nano Dimension.
Stratasys recently announced a definitive agreement to merge in an all-stock transaction valued at $1.8 billion. If the merger goes through, Stratasys shareholders will own 59% of the combined company, while legacy Desktop Metal stockholders will own 41%. If this merger goes through, it will result in one of the industry’s largest industrial 3D printing portfolios.
The Israeli company’s shareholders are now faced with a difficult decision. Stratasys management has already received and rejected several unsolicited takeover bids from Nano Dimension, another Israeli 3D printing company.
Takeover bid for Stratasys
This has to be one of the most exciting weeks in media history, with the major announcement of the merger of Stratasys and Desktop Metal being followed by an unsolicited bid by 3D Systems to acquire Stratasys. Yes, the industry is consolidating, and all eyes are now on Stratasys.
This saga has been ongoing for quite some time, with Stratasys recently rejecting as many as five different offers from Nano Dimension, including the recent hostile takeover bid. Nano Dimension CEO Yoav Stern has been aggressive pursuing the takeover, releasing videos in an attempt to directly connect with Stratasys stakeholders, highlighting the problems with Stratasys and how Nano Dimension can not only solve them, but also grow the company and share value for shareholders.
In a new development, on June 1st, 3D Systems made an unsolicited bid to acquire Stratasys (an offer made by an investor or company to purchase a company that is not actively seeking a buyer). This offer is for $7.50 per share and $7.50 and 1.2507 newly issued shares of common stock of 3D Systems per Stratasys ordinary share. At current prices, this equates to $17.92 per share and a $1.21 billion company valuation – a little less than Nano Dimension’s offer of $18 per share, but it could rise if 3D Systems’ share price rises.
In consultation with its independent financial and legal advisors, Stratasys’ board of directors will carefully review the 3D Systems proposal in accordance with its fiduciary duties and obligations under Stratasys’ merger agreement with Desktop Metal.
Following 3D Systems’ announcement, Stratasys’ share price rose 0.14% yesterday to $14.57, giving the company a market cap of $996.61 million. In anticipation of a bidding war, the stock price rose 7% in after-hours trading to $15.59.
3D Systems or Desktop Metal – Which is a better deal?
The question is difficult to answer, but we can try to analyse which makes more sense to us. 3D Systems and Stratasys have both been in the industry since its inception. Both companies have grown into industry behemoths over the years. To expand their portfolio, they have even developed their own technologies or acquired companies along the way. Stratasys now sells FDM (in-house development), Jetting (via Objet acquisition), DLP (via RPS acquisition), and SLS (in-house development) technologies. Because these are all polymer technologies, their applications are limited.
3D Systems, on the other hand, sells FDM (via Kumovis acquisition), Pellet Extrusion (via Titan Robotics acquisition), SLA, DLP, Jetting, SLS (via in-house development), Metal PBF (via in-house development), and bioprinting technologies.
The Stratasys on-demand manufacturing business, which 3D Systems decided to close in order to focus more on the core technology business, will be a definite addition for 3D Systems.
Considering this portfolio, there will be a lot of technology duplication if 3D Systems and Stratasys merge, and then realignment will be a whole different process.
In the case of Desktop Metal, the duplication is comparatively less because Desktop Metal has focused more on metal technologies such as extrusion, binder jetting, and powder bed fusion, but it also has EnvisionTec’s DLP technology.
As a result, Desktop Metal makes a lot more sense in this context.
It will be interesting to see how this deal progresses, or if there is a new offer on the table or a new player offering a new bid to takeover Stratasys. We’ll just have to wait and see.
