Stratasys expresses doubts on 3D Systems’ future growth prospects, reaffirms its unanimous approval of the transaction with Desktop Metal.
On September 6, 2023, Stratasys received a revised proposal from 3D Systems Corporation of $7.00 in cash and 1.6387 newly issued shares of 3D Systems common stock per ordinary share of Stratasys, representing a value of $15.26 per share for Stratasys, and a premium of only 3% to the unaffected closing stock price of Stratasys ordinary shares as of May 24, 2023.
After consultation with its outside financial and legal advisors, and following an extensive due diligence review of 3D Systems, the Stratasys Board unanimously determined that the revised proposal from 3D Systems continues to significantly undervalue Stratasys and does not constitute a “Superior Proposal” as defined in Stratasys’ merger agreement with Desktop Metal, Inc.
The Company issued the following statement:
3D Systems’ most recent proposal, received on September 6, 2023, to acquire Stratasys for $7.00 in cash and 1.6387 newly issued shares of 3D Systems common stock per ordinary share of Stratasys significantly undervalues Stratasys. The proposal by 3D Systems comprises consideration with a nominal value of $15.26 per Stratasys ordinary share as of September 11, 2023, representing a premium of only 15% to the closing stock price of Stratasys ordinary shares as of such date and a premium of only 3% to the unaffected closing stock price of Stratasys ordinary shares as of May 24, 2023. In fact, the consideration for Stratasys ordinary shares implied by 3D Systems’ most recent proposal is 35% lower than the value implied by 3D Systems’ July 13, 2023 proposal to acquire Stratasys for $7.50 in cash and 1.5444 newly issued shares of 3D Systems common stock per ordinary share of Stratasys (a nominal value at that time of $23.64 per Stratasys ordinary share).
In addition, the most recent proposal by 3D Systems carries several significant risks. In conducting mutual due diligence, Stratasys uncovered a significant number of material issues with respect to a proposed transaction with 3D Systems, including: serious concerns about 3D Systems’ short- to medium-term growth prospects, structural challenges to a path to attractive profitability, net synergy potential is materially lower than what 3D Systems is broadcasting, significant regulatory consummation risks and extended timeline to closing of 9 to 18 months, serious concerns regarding the ability of 3D Systems’ management team to run a combined company.
The details of each of these arguments can be read in this press communication.
In response to 3D Systems’ press release dated September 11, 2023, we would like to clarify the following:
- Our request for more stock and less cash: This request was driven by our concerns that a combined company would be operating with significantly less cash, potentially leading to an inability to continue to invest in the business or to further dilution from a need to raise significant cash amounts, especially given that the timeline to closing would be expected to run as long as 9 to 18 months, which would deplete additional cash from 3D Systems’ own balance sheet.
- Management of the combined company: We were very clear with 3D Systems that we were NOT concerned about the proposed composition of a new board despite Stratasys shareholders’ large ownership; however, we insisted upon having an appropriate management structure to ensure that the benefits of the combination would be achieved, including realization of the synergies, and that key employees would be retained during an extensive regulatory review process.
As announced on May 25, 2023, Stratasys entered into a merger agreement with Desktop Metal (the “Desktop Metal Merger Agreement”), pursuant to which Desktop Metal agreed to combine with Stratasys in an all-stock transaction. The Stratasys Board reaffirms its unanimous approval, recommendation and declaration of advisability of the transaction with Desktop Metal.
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