The board of Stratasys Ltd. is holding firm in its efforts to merge with competitor Desktop Metal Inc. while warding off acquisition bids from 3D Systems Corp. and Nano Dimension Ltd.
In June 30 statements, Stratasys’ directors again told shareholders not to tender shares for $20.05 to Nano and said 3D System’s recent updated and upgraded offer (which is worth about 3% more than Nano’s) “is opportunistic, continues to materially undervalue Stratasys, does not constitute a ‘Superior Proposal’ and does not provide a basis upon which to enter into discussions with 3D Systems.”
Stratasys and Desktop Metal leaders in late May announced they plan to join forces in a deal worth about $1.8 billion. But some competitors, investors and market watchers have raised questions about the deal’s strategic merits and forecasts—the 3D Systems team, for instance, points out that Desktop Metal’s core binder jet technology makes up just 4% of the additively manufactured metals market—and see more potential in other deals.
On June 30, 3D Systems President and CEO Jeffrey Graves called Stratasys’ latest rebuff “perplexing” and noted that its board didn’t address 3D System's offer details or the positive reaction from some investors to his team’s overtures.
“We are hearing from a spectrum of Stratasys shareholders that they understand and believe that a combination between 3D Systems and Stratasys offers an unparalleled option for certainty, scale and long-term growth,” Graves said. “This feedback from Stratasys’ own shareholders only strengthens our conviction that this is the right deal at the right time. It is concerning that, as public company directors, the Stratasys board is ignoring these signals.”
One such signal came the day before Stratasys’ latest statements from Los Angeles-based investment firm The Donerail Group LP, which controls a little more than 2% of Stratasys’ stock. In a letter to the company’s board, Managing Partner William Wyatt said his team now has “a heightened level of concern regarding the company’s governance and strategic direction” and called for it to acknowledge that 3D System’s offer “warrants immediate engagement.”
The Stratasys board hasn’t taken that view and CEO Yoav Zeif told employees on June 30 that the Desktop Metal deal remains on track to be completed during the fourth quarter.
“We will form the first company that covers the full manufacturing lifecycle, with enhanced market access and more than 27,000 industrial customers across industries and applications,” Zeif wrote. “We are excited about the additional growth opportunities of the combined company.”
The ball is back in 3D System’s court.