As a last attempt to stop the planned merger between Stratasys and Desktop Metal, 3D Systems delivered a signed merger agreement to Stratasys Ltd. According to 3D Systems, the binding offer presents shareholders with a certain, superior alternative to Stratasys’ planned acquisition of Desktop Metal and can be countersigned by Stratasys following the termination of its merger agreement with Desktop Metal. 3D Systems urges Stratasys shareholders to “vote no value-destructive Desktop Metal transaction at the September 28, 2023, Extraordinary General Meeting of Shareholders (EGM).”
While it is clear that the merger with Stratasys would be beneficial for the 3D Systems’ Board and probably also for the company’s shareholders, it is not equally clear how this would benefit Stratasys. 3D Systems accuses the Stratasys board of being “entrenched” However it is understandable that the Stratasys Board does not intend to relinquish control of the company, accepting to substantially be acquired by a similarly-sized competitor that has performed less proficiently over the past few years. Repeating an operation like the Stratasys-Objet merger, where Stratasys acquired Objet but the Objet management remained at the helm and continued to make key decisions, is unlikely. The Desktop Metal deal presents risks (as do all high-profile take-over operations in the AM scenario, just ask GE or Nikon) but also significant potential for the development of metal binder jetting market adoption. In addition, Stratasys is an early investor and partner of Desktop Metal, while many of its own technologies compete with and overlap 3D Systems’
President and CEO Dr. Jeffrey Graves stated, “Stratasys shareholders are incredibly skeptical of the recent decisions made by Stratasys’ management team and Board, and remain deeply concerned about a potential acquisition of Desktop Metal. In fact, since Stratasys’ rejection of our latest proposal earlier this week, we have heard directly from a significant number of Stratasys shareholders who have urged us to provide them with an alternative. We are now making a binding offer that we believe is worth more than $27 per share to Stratasys shareholders, inclusive of synergies. We note that Stratasys’ current share price is approaching a 10-year low, trading down close to $12 after their rejection of our proposal, which we believe is starting to reflect the market’s valuation of the Desktop Metal combination.”
Dr. Graves continued, “It became apparent in our discussions with Stratasys that we were facing an entrenched Board that was only interested in the appearance of engagement to appease shareholders amidst a heated proxy contest and cared little about delivering true shareholder value. There is no question of the value of our proposal, as Stratasys, even in its attempts to paint our offer negatively, affirmed $74 to $88 million in projected cost synergies, which creates significantly more value for Stratasys shareholders than the Desktop Metal transaction.”
3D Systems believes that Stratasys’ reasons for rejecting the Company’s proposal and its refusal to continue negotiations were either well-known to Stratasys and investors when Stratasys determined that 3D Systems’ July 13 proposal was likely to lead to a superior proposal, or misleading, self-interested and overly focused on short-term prospects. While near-term share prices for all companies in the sector have been pressured, the long-term trajectories of Stratasys and 3D Systems remain fundamentally unchanged in the past two months, raising serious questions about the credibility of Stratasys’ evaluation of the 3D Systems proposal. Most importantly, Stratasys affirmed that the 3D Systems combination would generate significantly more synergies, and therefore value creation, than any other available alternative.
Dr. Graves concluded, “Put simply, we do not believe that the Desktop Metal transaction will drive the unprecedented growth Stratasys states it will.”