Billionaire Paul Singer plans to reject General Electric Co.’s tender offer to acquire 3-D printer company SLM Solutions Group AG, presenting an obstacle as the industrial giant attempts to expand its manufacturing capabilities.
Singer’s Elliott Management Corp. “believes that GE’s offer is not in the best interests of SLM shareholders,” according to a statement Thursday. The hedge fund through affiliates has amassed more than 20% of the German company’s shares.
GE last month announced plans to buy SLM and Sweden’s Arcam AB for a combined $1.4 billion in a significant expansion of its 3-D-printing capabilities. GE is making greater use of so-called additive manufacturing as it focuses on building industrial equipment with digital capabilities. The company didn’t immediately respond to a request for comment Thursday.
The offer of 38 euros a share for SLM represented a 37% premium over the closing price the day before the deal’s announcement, Boston-based GE said last month. SLM rose 0.1% to close at 39.73 euros Thursday in Frankfurt, giving the company a market value of about 710 million euros ($777 million). GE was little changed at $29.05 at 2:31 p.m. in New York.
Exerting Influence
Singer has been boosting the stake since GE’s offer and has said that he intended to “exert influence” over matters such as the company’s capital structure and the makeup of managing and supervisory bodies. His investment firm is the second-largest shareholder in Arcam, with about 10% of outstanding shares, according to data compiled by Bloomberg.
Elliott has a track record of investing in European acquisition targets and holding out for a better price. It also has shown a willingness to remain a minority holder to benefit from the offers while preventing complete takeovers.
The hedge fund recently refused to tender its stake in Axis Communications AB, keeping Canon Inc. from owning more than 87% of the company. Elliott held out when EQT Partners AB acquired Swedish software maker Industrial & Financial Systems IFS AB, eventually selling for about 9% more than other shareholders.
When U.S. drug distributor McKesson Corp. sought to acquire German counterpart Celesio AG, Elliott and other minority shareholders initially rejected the price. A deal was salvaged, with Elliott earning bigger profits from convertible bonds it had amassed.
Arcam Offer
GE said this week that it would extend the acceptance period for its offer for Arcam to Nov. 1 from Oct. 14. Investors owning about 24% of outstanding shares had accepted the deal, the industrial giant said.
GE has said the acquisitions could help it build a $1 billion 3-D-printing business by 2020. The company already uses the machines to make parts, including fuel nozzles for jet engines, and prototypes.
The global market for 3-D printing is growing as companies increasingly use the technology for production of commercial components. The aviation industry was one of the early adopters because it enables more complex designs and lighter parts, cutting waste of expensive materials on factory floors.
