Nano Dimension Backs off as Stratasys and 3D Systems Discuss Merger/ Source: TCT Magazine
Desktop Metal (NYSE: DM), 3D Systems (NYSE: DDD), and Nano Dimension (Nasdaq: NNDM) have all shown interest in merging with market leader Stratasys, marking a significant development in the merger apocalypse (Nasdaq: SSYS). Nano Dimension Ltd., a 3D printing electronics firm based in Israel, recently said it was abandoning its plans to change the board of directors at Stratasys (Nasdaq: SSYS) and its special tender offer to the company’s shareholders. The announcement follows merger talks between Stratasys and 3D Systems.
Nano Dimension “Stands Down”
Nano Dimension Chairman and CEO Yoav Stern abruptly called off their hostile takeover of Stratasys, saying, “We believe that our efforts to convince a sufficient number of Stratasys’ shareholders that their entrenched board will continue its track record of leading the company toward new disasters has fallen short.” This came after months of antagonistic media coverage and mudslinging between the two companies.
For Stern, the biggest problem with Stratasys’s all-cash tender offer to shareholders is the shareholder rights plan (or “poison pill”) it established to prevent Nano Dimension from purchasing more than 15% of the firm. Terminating the poison pill was a prerequisite to completing the tender offer, but the corporation has refused to fulfill this need. Stern went on to say
The position of the Stratasys board shows that the poison pill will remain in place, preventing shareholders from tendering their shares. As a result of Stratasys’ request to the Judge, the Israeli Court will not issue a declarative decision addressing the poison pill until late this fall, far after Nano Dimension special tender offer has expired. Last but not least, a majority of Stratasys’ long-serving board cannot be easily replaced. In light of the foregoing, we have decided to’stand down’ with regards to Stratasys. Our alternative active M&A strategies will be maintained.
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Instead of focusing on organic expansion, Nano Dimension plans to sell its 14.1% stake in Stratasys and pursue development through other acquisitions. The business also has no plans to install its own candidates on the Stratasys Board. Nano Dimension has a lot of cash on hand, and we’ll discuss who it could try to buy in further depth in a future piece, but there are many potential suitors, some of which might offer the electronics 3D printing firm nearly as much prestige.
3D Systems and Stratasys Discuss Merger
Meanwhile, 3D Systems and Stratasys have set August 4, 2023, as the deadline for wrapping up due diligence and signing a merger agreement. A termination fee was included in the company’s “best and last” contractual offer issued on July 13 about the planned merger between Stratasys and Desktop. 3D Systems has been in talks with the companies since July 17 and has determined that the cost synergies of the two companies total $110 million, not $100 million. Nevertheless, when 3D Systems made this declaration, Stratasys responded by saying that 3D Systems had not supplied enough due diligence documents or data on potential negative revenue synergies.
3D Systems and Stratasys Discuss Merger/ Source: TCT Magazine
While 3D Systems has offered some research of potential cost savings, it is only at a high level and is missing key specifics that would lend credence to the company’s claims. We are still waiting for all this information from 3D Systems despite their news release indicating that they have participated cooperatively. Stratasys stated in a press statement that the Stratasys Board “has to grasp these essential aspects to make a prudent and informed judgment” in light of the fact that “the bulk of the proposed merger consideration” consists of 3D Systems common stock.
The business also disagrees with the language used in 3D Systems’ most recent release, which referred to their offer as the “best and last offering,” implying that the Stratasys Board was expecting for more negotiations. As stated by the firm:
Stratasys further points out that, for the first time, 3D Systems has stated that the terms and conditions of its public proposal from July 13, 2023 represent their “best and last proposal.”
3D Systems does not specify if their negotiation position has changed after July 13, 2023, or if so, when, or why.
The Stratasys Board will examine all proposals in light of the required due diligence and analysis, including regulatory study, regardless of what 3D Systems says or does. Cooperation and honesty, rather than misleading public comments, are the way ahead if 3D Systems is serious about merging with Stratasys.
This suggests that both corporations are using public remarks to negotiate their conditions. Nano Dimension’s withdrawal is startling after Stratasys, the wrestling match’s protagonist, and Nano, the heel, grappled for so long. Stratasys’ stock price has risen beyond $20 since January, so it may still win despite the hassle. More crucially, 3D Systems had to boost its offer, even binding it, before Nano Dimension backed down. The termination fee may save Desktop Metal while it seeks a buyer. Instead, 3D Systems-Stratasys might buy it.
On the current Printing Money episode, Danny Piper noted the deal isn’t closed until it’s closed, so there are still developments.
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