Big news from Desktop Metal: their lawsuit against Nano Dimension has succeeded.
Fabbaloo readers may recall the long saga of Nano Dimension’s acquisition strategy, which began a couple of years ago and ended up abruptly weeks ago when a shareholder revolt replaced company management.
Before the regime change, Nano Dimension had been slurping up other 3D print companies left and right. At the time of the management change, there were two outstanding acquisitions that had not quite been completed, one with Desktop Metal and the other with Markforged.
Why were these left outstanding? It’s because corporate acquisitions are complex legal matters that can take many months to conclude. There are protocols for dealing with existing shareholders, regulatory approvals to obtain, and more. All of that usually means many months before deals complete. Unfortunately for Desktop Metal and Markforged, their deals were in the midst of that process when Nano Dimension management changed over.
The shareholder revolt was in part driven by the previous management’s acquisition strategy. They felt that this was a poor use of the company’s considerable financial resources. The implication is that the new management was far less keen on acquisitions.
The betting on the street was that the new management would cancel the acquisition, which can always be done by one party paying the other a penalty fee that would be laid out in the preliminary agreements.
However, Desktop Metal threw a wrench in the process by launching a lawsuit against Nano Dimension, accusing them of improperly delaying the merger. Specifically, the lawsuit dealt with delays in acquiring the necessary regulatory approvals.
Now we learn that the lawsuit has concluded, and the court has ruled in Desktop Metal’s favor. Desktop Metal writes:
“In its March 24 post-trial opinion and order, the Court found that Nano materially breached the Merger Agreement, rejected Nano’s counterclaims, and granted Desktop Metal specific performance. The Court ordered that, within 48 hours of its order, Nano must agree to and execute a national security agreement with the Committee on Foreign Investment in the United States, which is the sole remaining condition to closing the merger. The Court further ordered that if the closing has not occurred by March 31, 2025, the end date under the Merger Agreement may be extended, at Desktop Metal’s discretion, until the closing of the merger. The Court’s ruling constitutes a final judgment on the specific performance claims, making it immediately appealable to the Delaware Supreme Court under Court of Chancery Rule 54(b).”
That’s pretty clear. The court clearly ordered Nano Dimension to get it done, and quickly.
Desktop Metal added:
“Desktop Metal intends to move expeditiously toward closing as soon as possible, while continuing to serve its customers, employees, and other stakeholders.”
This announcement has had a significant impact on Desktop Metal’s valuation. Desktop Metal’s market valuation has been running around US$60-80M in recent times, which is a bit strange given that Nano Dimension’s offer to merge far exceeded that amount. In other words, investors were discounting Desktop Metal’s stock price due to the uncertainty of whether the merger would actually happen.
But now it is happening, and Desktop Metal’s valuation as of this writing is around US$140M, almost twice what it was last week.
Correspondingly, Nano Dimension’s is down significantly, showing the other side of the transaction.
So it now seems that the merger will proceed, barring any last-minute heroics by Nano Dimension. This will create a Nano Dimension with quite a few 3D print technologies under its umbrella, including all the prior acquisitions of Desktop Metal, as well as their own acquisitions. These include ExOne, Aerosint, Adaptive3D, EnvisionTEC, and Aidro.
This settles one of the outstanding acquisitions, but what about Markforged? That company did not launch a lawsuit as Desktop Metal did, so it remains to be seen what happens there. However, investors seem to be anticipating something as the company’s stock price has risen significantly, similar to Desktop Metal’s.
Via Desktop Metal
