Nano Dimension has announced that it has made a formal, non-binding offer to acquire Stratasys Ltd. for 18.00 USD per share in cash. Nano Dimension acquired 12.12% of the outstanding ordinary shares of the company in July 2022, which it said was viewed as a strategic move to create more value for its shareholders.
According to Nano Dimension’s press release announcing the acquisition, the takeover would create a ‘market leader with unparalleled portfolio of materials, software, and deep learning with a go-to-market strength in the form of sales channels.’ Nano Dimension has held informal discussions with Stratasys regarding the offer and the merits of the combination.
Nano Dimension owns approximately 14.5% of Stratasys’ outsanding shares, (13.7% on a fully diluted basis), and has been the largest shareholder since July 2022. The formal offer that has been made would acquire the remaining shares for a total consideration of approximately 1.1 billion USD in cash.
This offer reflects a premium of 36% to the unaffected closing trading price as of March 1, 2023, and a 31% premium to the 60-day VWAP through March 1, 2023. Nano Dimension says the proposal delivers immediate and certain value to Stratasys’ shareholders and will ‘vastly’ strengthen the company’s ability to capitalise on opportunities in the current environment.
Stratasys confirmed it had received the offer shortly after Nano Dimension's announcement on Friday March 10, with the company's Board of Directors set to 'review and evaluate' the proposal to determine the course of action 'that it believes is in the best interest of the Company and Stratasys shareholders.'
Nano Dimension CEO and Chairman Yoav Stern did not rule out further investment after the acquisition of 12.12% of the shares when the purchase was announced “Incidentally, we may increase or decrease our investment in Stratasys, subject to market conditions and other economic factors,” said Stern in July 2022.
Later, when speaking to TCT, Stern said: “Not necessarily,” when asked if Nano Dimension had a desire to hold a controlling stake in the company, at a time when rumours were swirling that the company wanted to position itself as the 3D printing leader.
An aim of Nano Dimension, with the combination of the two companies is to establish a ‘market-leading portfolio’ of complementary systems, materials, software, and complete solutions. Another goal is to accelerate research and development, including the accelerated deployment of Nano Dimension’s deep learning based AI group, DeepCube, which is the foundation of its cloud manufacturing platform.
Nano Dimension says it is also aiming to enhance market penetration, new customer acquisition and cross-selling opportunities. The company also aims to ‘generate significant synergies’ by streamlining the organisation of the two companies, improving cost structure, aligning overhead and go-to-market efforts, and yielding efficiencies by combining R&D resources.
Nano Dimension says the acquisition will provide attractive opportunities to management and employees, as well as brining the companies together to be a ‘leader in growth and profitability.’
In this week's press release announcing the acquisition offer, Yoav Stern commented: “We have great respect for Stratasys’ business, including Chief Executive Officer Dr. Yoav Zeif, who we believe is the architect of Stratasys’ recent positive momentum. Together, Nano Dimension and Stratasys can offer an increasingly exciting set of solutions for customers while becoming better positioned to compete in the AME and AM industries. We believe this is an exceptional opportunity for all stakeholders -shareholders, customers, management, employees, and business partners, of both companies.
“In recent years the AM market has grown in size and accelerated remarkable technological advancement, and it is on the cusp of its next phase of development and growth. Bringing Stratasys and Nano Dimension together is about positioning both companies to succeed as a combined company and lead the industry into the next phase. With Nano Dimension’s strong culture of innovation and track record of successful merger integration, we expect to unlock significant value for all stakeholders. We look forward to continuing our discussions with Stratasys to reach a mutually acceptable transaction.”
The execution of a definitive merger agreement would be subject to due diligence and approval by the boards of directors of the two companies, and completion of the transaction would be subject to customary closing conditions, including receipt of required regulatory approvals and approval of Stratasys’ shareholders.
The acquisition offer comes in the midst of a power struggle at Nano Dimension. The company adopted a shareholder rights plan in January 2023 that was unanimously approved by its Board of Directors, after top shareholder Murchison Ltd. made a non-binding proposal to acquire the remaining shares in the company for 4 USD per share, which at the time was a premium of 52%, with the total offer amounting to 995 million USD. Murchison is said to own more than 10 million shares in Nano Dimension.
Stratasys deployed a similar shareholder rights plan in July 2022, a week after Nano Dimension acquired its 12% stake. Stratasys said this plan was to deter any potential ‘hostile takeover’. The rights plan had a 364 day term, and expires on July 24, 2023, and was implemented with the aim of protecting the long-term interests of Stratasys and its shareholders.
In the midst of the Nano Dimension power struggle, the company hired Lazard Ltd to advise on potential mergers and acquisitions, and to address Murchison’s challenges to the company’s value creation strategy for shareholders. Lazard is acting alongside Greenhill & Co., LLC as Nano Dimension’s financial advisors, and Sullivan & Worcester LLP is serving as legal advisor.
Another chapter to the Nano Dimension story is taking place on Monday March 20, 2023, at a Special General Meeting of Nano Dimension Shareholders, which was announced by Murchison, which stated a desire for the Board of Directors at Nano Dimension to be ‘reshaped’.
Below is the full text of the letter detailing the offer delivered to Stratasys by Nano Dimension on March 6, 2023.
March 6th, 2023 To: The Board of Directors of Stratasys Ltd. Attn: Dov Ofer, Chairman, and Yoav Zeif, Chief Executive Officer
Dear Mr. Ofer and Mr. Zeif,
As you are aware, for nearly a year now, Nano Dimension Ltd. (collectively with its affiliates, “NANO”) has been a significant shareholder of Stratasys Ltd. (“Stratasys” or the “Company”) and is currently your largest shareholder with approximately 14.5% of the Company’s common stock outstanding (13.7% on a fully diluted basis2). We made our investment because we have high regard and appreciation for the Company’s achievements. We have been particularly impressed by the Company’s trajectory as a polymers’ Additive Manufacturing (“AM”) pioneer creating the preeminent platform for premium polymers’ 3D printing systems, material and consumables as well as design and other supporting software. The combination of these capabilities together with strategic acquisitions has positioned the Company as a leading manufacturer of fused deposition modelling (FDM) & PolyJet AM machines for prototyping.
We believe now is the time to combine our two companies and are pleased to present to you this non-binding indicative offer (the “Indicative Offer”), which outlines the principal terms and conditions under which NANO would propose to enter into a business combination with Stratasys (the “Proposed Transaction”). We are highly confident in the merits of the Proposed Transaction and we strongly believe the offer represents an attractive proposal for all stakeholders of the Company.
Transaction Terms
NANO seeks to acquire the remaining approximately 85.5% of Stratasys’ outstanding common shares (86.3% on a fully diluted basis3) that NANO currently does not own. Under the terms of the Proposed Transaction:
- NANO will offer all Stratasys shareholders $18.00 per Stratasys share in cash, reflecting a premium of 36% to the closing trading price as of March 1st, 2023 and a 31% premium to the 60-day VWAP, as of March 1st, 2023; this valuation represents a ~24x multiple based on 2022 adjusted EBITDA of $36.1 million4 and ~21x multiple based on the midpoint of the Company’s 2023 adjusted EBITDA guidance of ~$43 million.5
- A key aspect of NANO’s interest in the Company is the importance of the current management team staying with the combined business. We would expect the current management team to enter into retention programs (performance and time based) for a few years with various mechanisms to qualify for a cash “stay” package. We believe a key success factor for NANO to date has been our ability to retain leaders that join us through our M&A strategy in the pursuit of shareholder value.
Our Indicative Offer remains subject to the conditions set out in this letter and is based on the review of publicly available information on Stratasys, as well as our general knowledge of the industry. The terms of this Indicative Offer are further subject to adjustments based on the conclusions from further due diligence.
Conditions to the Proposed Transaction
Completion of the Proposed Transaction would be subject to customary conditions, including without limitation the following:
- The completion of our due diligence of the Company, which we expect to primarily include (i) financial and tax review by outside accountants; (ii) reviewing of the Company’s strategy and operations through meetings with the Company’s management team; and (iii) review of legal, intellectual property, environmental, real estate and other customary matters, and NANO’s satisfaction with the results thereof.
- The negotiation and execution of a mutually acceptable transaction agreement, consistent with transactions of this type.
- Approval of, and/or consents from, required third parties, lenders and/or governmental regulatory agencies (including HSR and, if required, CFIUS approval).
- Approval of the transaction agreement and other definitive documentation by our respective Boards of Directors and Stratasys’ shareholders.
- The Proposed Transaction is not expected to require approval by NANO’s shareholders.
We present an offer that is both all cash and fully financed. NANO is a public company (Nasdaq: NNDM; www.nano-di.com). We have over US$1 billion of cash and cash equivalents, and no debt. Given our cash position and access to capital, the Proposed Transaction will not be contingent on obtaining third-party financing. Our preliminary, unaudited 2022 revenue is over $43M which represents an increase of ~310% over 2021 and 12x+ our 2020 revenue. NANO’s systems are being sold in four continents: ~50% of the revenue is generated in the USA, and the rest in Europe and Asia Pacific, with customers being world leading defense, aerospace, aviation, medical, advance industrial electronics producers, research institutes and printing machine producers.
Cooperation
We are prepared to focus our efforts on the Proposed Transaction and are confident we can complete our due diligence and negotiate all definitive documentation within 30 days. Notwithstanding the foregoing, we would expect to jointly agree on the appropriate timeline to best position the Proposed Transaction for future success. We are willing to dedicate meaningful financial and personnel resources to this project and would expect a similar level of commitment from the Company.
Advisors
We have retained Greenhill & Co., LLC (“Greenhill”), Lazard Frères & Co., LLC (“Lazard”) and Sullivan & Worcester LLP (“Sullivan”) to advise us on this Proposed Transaction. Any notification under this agreement and any email exchanged by parties shall be conducted with NANO’s advisors at the addresses stipulated below:
[Personal advisor details omitted for privacy.]
This Indicative Offer is not intended to be a binding contract between us or an offer by us capable of acceptance, but rather it is a proposal to confirm NANO’s interest in Stratasys and to facilitate further discussions. NANO and Stratasys will be bound only in accordance with the terms and conditions to be negotiated and contained in mutually executed definitive documentation. This letter shall be governed by and construed in accordance with the laws of New York, USA, without regard to principles of conflicts of law.
I would like to reiterate our sincere interest and enthusiasm in pursuing this opportunity with Stratasys. I am prepared to marshal our resources to begin the process immediately and expeditiously complete due diligence and reach an agreement on definitive documentation. We appreciate your prompt consideration of our proposal. On behalf of NANO’s management team and Board of Directors, I look forward to working with you in pursuit of this compelling combination.
Please understand that we strongly prefer to engage in a mutually agreed upon collaborative process in order to work towards an agreement that will deliver significant value to your shareholders. We hope that our offer will result in a swift response, engagement and an agreement on a transaction between the two companies. To that end, we expect to hear back from you and your board no later than March 13th, 2023, at 12:00 PM ET (17:00 Israel Time).
We remain available both personally as well as through our advisers to elaborate on our Indicative Offer.
Sincerely, Nano Dimension Ltd.
