Stratasys/3D Systems
Stratasys announced on June 1 2023, that it received an ‘unsolicited non-binding indicative proposal from 3D Systems Corporation to acquire the company for 7.50 USD in cash and 1.2507 newly issued shares of common stock of 3D Systems per ordinary share of Stratasys.
On June 2, 3D Systems issued a statement confirming the submission of a 'Superior Proposal' to combine with Stratasys. The company said the combination of itself with Stratasys would create a 'Clear Pure-Play Additive Manufacturing Leader with Unmatched Scale and Highly Attractive Financial Profile in Rapidly Scaling Industry'.
3D Systems said that the combination would create an industry leader, with Stratasys shareholders owning 40% of the combined company and receiving approximately 540 million USD in cash. 3D Systems said it submitted the proposal to the Stratasys board on May 30, 2023.
According to 3D Systems, based on a set of illustrative assumptions, and assuming approximately 100 million USD in run-rate cost synergies, the combined company would be positioned to deliver at least a total value in excess of 1.840 billion USD to Stratasys shareholders, around 740 million USD in excess of Stratasys' fully diluted market cap using a 60-day VWAP (Volume-Weighted Average Price) as of May 24 2023, the last trading day prior to the announcement of Stratasys' agreement with Desktop Metal.
3D Systems said the value of the proposed combined company corresponds to approximately 25 USD per Stratasys share, or a 70% value uplift.
3D Systems said these terms imply a nominal initial value per Stratasys share of approximately 19 USD based on the 60-day VWAP as of May 24. The company said this implied nominal value represents a premium of 27% to the closing trading price on May 24, 2023, and a premium of approximately 35% to Stratasys' stock price as of the close of trading on March 9 2023, the last trading day prior to the first public offer from Nano Dimension to acquire Stratasys.
3D Systems President and CEO, Dr. Jeffrey Graves said: "The combination of 3D Systems and Stratasys is simply the best outcome for the shareholders of both companies. We feel strongly that now is the time for all parties to recognise the overwhelming logic of our two businesses coming together. We are in a unique position to move with confidence and speed and we encourage the Stratasys Board of Directors to engage with our proposal and make this combination a reality for the benefit of the shareholders, employees and customers of both companies."
3D Systems included in its statement the following about what the 3D Systems/Stratasys combination would 'promise':
- Necessary Scale to Lead the Additive Manufacturing Industry
- Compelling market position with a greater range of additive technologies and enhanced ability to invest in innovation, creating additional revenue opportunities.
- Combined company will offer increased go-to-market opportunities and unmatched customer value proposition, improving market coverage and access for customers looking for additive manufacturing solutions.
- Comprehensive offering of production-ready additive technologies in an industry expected to grow at a CAGR of approximately 21% over the next 5 to 7 years.[3]
- Highly Certain, Significant Value Creation
- Participation in highly certain value creation through realization of approximately $100 million in estimated cost synergies.
- Proposal, inclusive of estimated cost synergies, represents value creation to Stratasys shareholders worth $1.8 billion and represents a value of approximately $25 per Stratasys share, or a 70% value uplift.
- Industry-leading Financial Profile
- Pro forma estimated revenue for a combined 3D Systems-Stratasys in calendar year 2024 is $1.3 billion, resulting in the largest pure-play additive manufacturing company in the industry, before considering any potential additional revenue opportunities.
- Pro forma estimated free cash flow for combined 3D Systems-Stratasys in calendar year 2024 is $121 million, inclusive of synergies.
- Transactional Speed and Certainty
- Entrance into a definitive merger agreement without delay and on terms that provide Stratasys shareholders with at least as much deal certainty as existing all-stock merger agreement with Desktop Metal.
- Immediate cash and liquid stock value without any financing condition or delay to closing to accommodate financing.
- Regulatory approvals obtainable in a timely manner.
Dr. Graves added: "We are at an inflection point in our industry and we see significant upside for our shareholders and all stakeholders by capturing the benefits of scale, enhancing investment in innovation and delivering long-term profitable growth. We know and respect the Stratasys business and the people who make it a success around the world. We are committed to creating a combined platform that enables these two great companies to serve our global customers and lead the industry with innovative technology offerings."
Goldman Sachs & Co. LLC. is acting as exclusive financial advisor and Freshfields Bruckhaus Derringer (US) LLP, together with Herzog, Fox & Neeman in Israel, is acting as legal counsel to 3D Systems in connection with the proposed transaction according to the company.
Read more:
Stratasys and Desktop Metal to merge in deal worth $1.8 billion
Stratasys & Desktop Metal: What we know so far
7 things we learned from Stratasys & Desktop Metal’s Joint Transaction Investors Call
Stratasys board unanimously rejects partial tender offer from Nano Dimension
Desktop Metal adopts shareholder rights plan to ‘maximise value’ in deal with Stratasys
As announced on May 25, 2023, Stratasys has entered into a merger agreement with Desktop Metal, Inc. under which the two companies are set to combine in an all-stock transaction, creating a new company valued at an estimated 1.8 billion USD. The transaction, which is expected to close in the fourth quarter of 2023, is subject to customary closing conditions, including the approval of Stratasys shareholders and Desktop Metal’s stockholders and the receipt of governmental and regulatory approvals.
Stratasys says its board of directors will carefully review the 3D Systems proposal, in accordance with its fiduciary duties, and its obligations under Stratasys’ merger agreement with Desktop Metal, in consultation with its independent financial and legal advisors.
According to Stratasys’ statement on the matter, it has not yet made any determination as to the 3D Systems proposal within the framework contemplated by the Desktop Metal merger agreement, which it says remains in effect. Stratasys adds that the company also has not changed its unanimous approval, recommendation and declaration of the advisability of the agreed transaction with Desktop Metal.
In the statement on the 3D Systems offer, Stratasys said that its shareholders do not need to take any action at this time in regards to the proposal.
At the time of writing, Stratasys has now rejected a total of five different offers from Nano Dimension, three cash offers and two partial tender offers. On May 30, 2023, Stratasys announced that its board, after consultation with its independent financial and legal advisors, unanimously determined that the partial tender offer from Nano Dimension to acquire ordinary shares of the company for 18.00 USD in cash ‘substantially undervalues the company’ and is not in the best interests of its shareholders.
With regards to this offer from Nano Dimension, Stratasys’ board unanimously recommended that its shareholders reject the offer and deliver a notice of objection against it.
JP Morgan is acting as an exclusive financial advisor to Stratasys, and Meitar Law Offices and Wachtell, Lipton, Rosen & Katz are serving as legal counsel.
