The Delaware Court of Chancery has ordered Nano Dimension to move forward with its acquisition of Desktop Metal.
A trial was held earlier this month after Desktop Metal took legal action against Nano Dimension, alleging that the company had breached its obligation to use reasonable best efforts to obtain regulatory approval as soon as practicable in connection with its proposed merger agreement. The two companies entered into a merger agreement last year, with Nano also moving to acquire Markforged.
In its post trial opinion and order, published on March 24, the Delaware Court of Chancery found that Nano Dimension 'materially breached' its merger agreement with Desktop Metal, rejected Nano's counterclaims and ordered Nano to agree to and execute a national security agreement with the Committee on Foreign Investment in the United States - the sole remaining condition to closing the merger - within 48 hours of its order. Desktop Metal, according to the court, 'has complied in all material respects with its obligations under the Merger Agreement.'
According to the order, Nano is required 'to pay the full Per Share Merger Consideration' and is 'enjoined from terminating the Merger Agreement or taking any action inconsistent with its performance obligations under the Merger Agreement that would negatively impact its ability to perform its obligations under the Merger Agreement.' The Court also ordered that if the closing of the deal has not occurred by March 31, 2025, then the end date under the Merger Agreement may be extended as Desktop Metal's discretion until the closing of the merger.
Desktop Metal, Inc. (NYSE: DM) (“Desktop Metal”) today announced that the Delaware Court of Chancery has ruled in favour of Desktop Metal in its pending litigation against Nano Dimension Ltd. and Nano US I, Inc. (together, “Nano”) regarding the merger agreement between Desktop Metal and Nano dated July 2, 2024 (the “Merger Agreement”). In its March 24 post-trial opinion and order, the Court found that Nano materially breached the Merger Agreement, rejected Nano’s counterclaims, and granted Desktop Metal specific performance. The Court ordered that, within 48 hours of its order, Nano must agree to and execute a national security agreement with the Committee on Foreign Investment in the United States, which is the sole remaining condition to closing the merger.
The Court's order concluded: "Given the expedited nature of these proceedings, neither the Post-Trial Memorandum Opinion nor this Order address all of the parties’ respective claims and counterclaims. There is, however, no just reason for delay. Indeed, there is every reason to allow immediate appeal. This Order therefore constitutes a partial final judgment entered pursuant to Rule 54(b). The parties are instructed to meet and confer to identify any other matters that the court needs to address to bring this action to a conclusion at the trial level and identify those issues in a joint letter submitted to the court."
A Desktop Metal press release states that the company intends to move expeditiously towards closing the merger 'as soon as possible, while continuing to serve its customers, employees and other stakeholders.'
An unhappy coupling
This week's court order could signal the end of a saga that has been rumbling on for nearly three years.
Nano Dimension's bid to become a major player in the AM industry started with it acquiring a significant share in Stratasys in July 2022, growing that share to around 14% and then making several attempts to acquire a majority share in the company - much to the dismay of the Stratasys board, shareholders and the wider AM community.
Those unsuccessful attempts came at a time when Stratasys was trying to merge with Desktop Metal and Nano Dimension - as the single entity with the most Stratasys shares to its name - was calling on other shareholders to vote against it. The year 2023 ended with none of the various suggested mergers being completed, with Stratasys shareholders eventually voting against the Desktop Metal deal.
Then, in the summer of 2024, Nano Dimension moved to acquire Desktop Metal instead. As Nano CEO Yoav Stern would explain at the time, Nano Dimension was voting against a deal in 2023, but not vocalising an opinion on Desktop Metal. In Desktop, Stern and his leadership team saw the potential for various synergies - only maximised when Markforged would later come on board - and then Desktop shareholders seem to fall in line with that vision, approving the takeover in October. The Department of Justice had no issues with the deal either.
But Murchinson did. Murchinson, a global investment firm, is among the largest shareholders of Nano Dimension, and while Nano was working to, inorganically, become one of the largest players in AM, Murchinson was calling for its fellow shareholders to oust Stern and his team from the top of the company. It was a saga within a saga. Eventually, Murchinson got its way. A court ruled in favour of the investment firm's allegations that Nano had ignored a vote to add two Murchinson-backed directors to the board in 2023, and by the end of last year those two directors were appointed. Shareholders had also voted in another two Murchinson-nominated figures at an AGM earlier that year, and six existing Nano directors all resigned. Stern had left his position on the board after the AGM vote and, within weeks, lost his role as CEO too.
It meant that the leadership responsible for entering the Desktop Metal merger agreement was no more. Doubts were cast as to whether the new-look Nano leadership would want to move forward with the deal, prompting Desktop Metal to take legal action.
This week was Desktop Metal's turn to get what it wanted, with a court order instructing Nano Dimension to complete a now even more complex union of the two companies.
Read more:
Nano Dimension and Desktop Metal CEOs discuss acquisition and AM growth targets
Explained: Why Nano Dimension is acquiring Desktop Metal
Explained: What Nano Dimension's acquisition of Markforged means for the AM industry
