The directors of additive manufacturing venture Stratasys Ltd. have voted unanimously to not start talks with rival 3D Systems Corp. over the latter’s bid to break up Stratasys’ planned purchase of Desktop Metal Inc.
Stratasys leaders and their peers at Desktop Metal on May 25 announced plans to join forces in a deal worth $1.8 billion. That plan, they said then, would set the stage for the combined organization to pull in $1.1 billion in sales in 2025 while cutting costs by $50 million annually. Just a few days later, however, 3D Systems offered to pay $1.2 billion in cash and stock for Stratasys and promised “simply the best outcome for the shareholders of both companies” in part because of the promise of $100 million in annual savings down the road.
On June 20, both companies issued statements on the proposed transactions. 3D President and CEO Jeffrey Graves said his team had not heard from Stratasys in the past three weeks but reiterated his belief in 3D’s bid, noting that investors had bid up his company’s shares and thus made its offer more valuable to Stratasys shareholders.
Soon after, the Stratasys board issued statements saying, among other things, that 3D’s acquisition offer does not constitute what the Desktop Metal agreement defines as a “superior proposal” because it undervalues Stratasys, doesn’t account for 3D’s (slower) growth plans and “lacks critical metal technology to be successful in mass production additive manufacturing.” That last element is a key selling point in having Desktop Metal, which has a stronger metal manufacturing business, join up with Stratasys, which is more established in marketing polymer products.
The Stratasys board also has published some new financial projections and now says that joining forces would goose top-line growth to at least $1.4 billion in 2026. The directors and their financial advisors now say they see EBITDA margins—previously forecast to be between 10% and 12 in 2025—growing to somewhere between 14% and 20% in 2026.