Stratasys shareholders vote against Desktop Metal merger
An unexpected turn of events in a story that is now likely to continue to confuse analysts, as Stratasys looks for new alternatives
Based on a preliminary count of the votes cast at the Company’s Extraordinary General Meeting of Shareholders, Stratasys shareholders did not approve the terms of the previously announced merger agreement with Desktop Metal, Inc. (NYSE: DM), dated May 25, 2023. The Stratasys (Nasdaq: SSYS) Board of Directors has now initiated a process to explore strategic alternatives for the Company.
Accordingly, Stratasys has terminated the Merger Agreement. The final, certified voting results for the Stratasys EGM will be provided in a Form 6-K to be furnished to the U.S. Securities and Exchange Commission, which Stratasys expects to occur within four business days.
The comprehensive process to maximize shareholder value will begin immediately. Potential strategic alternatives to be explored or evaluated may include but are not limited to, a strategic transaction, potential merger, business combination or sale.
“We have decided to undertake a comprehensive and thorough review of all available strategic alternatives,” said Dov Ofer, Chairman of Stratasys’ Board of Directors. “We are entering this review as the leader in the additive manufacturing space and will continue to execute our strategy, powered by innovation and profitable growth, which has led Stratasys to outpace the competition. Importantly, we remain focused on our mission to deliver value to customers and are committed to taking the appropriate actions to maximize value for all Stratasys shareholders.”
There can be no assurance that the Company’s strategic review process will result in any transaction or other strategic outcome. Stratasys does not intend to disclose further developments on this strategic review process unless and until it determines that such disclosure is appropriate or necessary.
Who wins?
While this turnout will likely not necessarily result in the previously proposed (and rejected by Stratasys Board) takeover offers by Nano Dimension or 3D Systems, it does mark a minor victory for the two companies as they urged Stratasys shareholders to vote “No” to the Desktop Metal merger. While it did present some risks, the Desktop Metal merger seemed as the most likely turnout and certainly the most desirable for Stratasys current Board of Directory. 3D Systems (more so than Nano Dimension, even as the company played a major role in blocking the merger as the largest single Stratasys shareholder) may now get another chance at taking over Stratasys. In particular, 3D Systems had offered to cover the termination merger fees (but may no longer want to do so now).
It is not fully clear what this will mean for Desktop Metal but the company will definitely be getting something out of this. Initially, the company led by Ric Fulop had agreed to the merger with Stratasys as it struggled to rapidly achieve the profitability and growth results it envisioned. However, it is no secret that while Mr. Fulop understood the benefits of the merger, he did not want to relinquish control of the company. So he may ultimately welcome this turn of events. Desktop Metal stockholders had approved the merger agreement with Stratasys Ltd. which means that DM is now to be compensated for agreed-upon fees.
“We’re grateful for our shareholders’ support. While the team at Desktop Metal believed in the merits of our combination and is disappointed in the outcome of the merger agreement, we are completely confident in the trajectory of our business, which continues to lower operating costs while growing revenue,” said Ric Fulop, Founder and CEO of Desktop Metal. “Our plan to reduce costs and generate revenue remains on track as customers continue transitioning to our AM 2.0 technologies for mass production of metal, polymer, ceramic and health products.”
Desktop Metal entered the second half with cash of $127.6 million and has demonstrated improvements to operating cash management over multiple quarters.
Shareholder Rights Plan Extension
Meanwhile, the Stratasys Board of Directors has unanimously adopted an amendment to Stratasys’ shareholder rights plan (the “Rights Plan”), pursuant to which the expiration date of the Rights Plan was extended for three months.
The Rights Plan is not intended to prevent or interfere with any action with respect to Stratasys that the Board determines to be in the best interests of the Company and its shareholders. Instead, it will support the Board’s ability to carry out its strategic review process and position the Board to fulfill its fiduciary duties on behalf of all shareholders by ensuring the Board is able to evaluate all options to maximize shareholder value, and preserve for all shareholders the long-term value of the company in the event of a takeover or acquisition of a controlling stake without the payment of a control premium for all Stratasys ordinary shares.
Additional details about the Rights Plan extension will be included in a separate Form 6-K to be furnished by Stratasys to the SEC.
