Stratasys announced a new “Shareholder Rights Plan”, but what the heck does that mean?
This is ultra-corporate stuff, but it is certainly interesting and fits in with events that have already taken place.
What has transpired? Specifically, Stratasys’ board of directors has voted in a new procedure they call a “limited duration shareholder rights plan”. They explain:
“The adoption of the Rights Plan is intended to protect the long-term interests of Stratasys and all Stratasys shareholders and enable them to realize the full potential value of their investment in the Company. The Rights Plan is designed to reduce the likelihood that any entity, person or group would gain control of, or significant influence over, Stratasys through the open-market accumulation of the Company’s shares without appropriately compensating all Stratasys shareholders for control.”
Wait, what is that all about?
Basically, it’s a procedure that is intended to ensure value for existing key shareholders.
Remember that Stratasys is one of the several 3D print companies that are publicly traded. (By the way, we track these companies each Sunday in our “Who’s the Biggest” series).
Because they are publicly traded, it is possible for a party with sufficient funds to simply buy up enough shares to gain 50% or more of the company. If so, that party then holds majority voting status for the board seats and can thus “take over”, if they so choose.
Who, exactly owns Stratasys, anyway? It turns out this information is publicly disclosed as per market regulations, and the top owner by far at the moment seems to be ARK Investments, a well-known high-tech investment fund. The remaining large owners are a series of other investment funds, each taking a small slice.
But hold on, there’s one more: Nano Dimension. The 3D printer manufacturer took a huge 12.1% stake in Stratasys last week. As we reported, this move shot Stratasys stock up 10% due to demand for shares, but knocked down Nano Dimension slightly due to the expense.
The result of the purchase was that Nano Dimension became the second largest shareholder of Stratasys, only slightly behind ARK Invest.
What does it mean if a 3D printer company’s largest shareholder is ANOTHER 3D print company? Could that company influence Stratasys’ direction? You bet it can.
As far as I can tell, there hasn’t been much going on between the two companies previously, although one never knows what happens behind the scenes. The bottom line here is that a company came out of left field and suddenly became a big owner of Stratasys.
This move no doubt shocked Stratasys leadership and the board, as their positions became somewhat less secure with Nano Dimension taking that huge stake. The new shareholder rights plan is designed to prevent sudden takeovers through procedural means, and is a legal mechanism that many other companies have installed.
Consider the possibility that Nano Dimension might buy more of Stratasys, raising their stake. They might even gain financing to do so from other parties — even some of Stratasys’ competitors, potentially.
This is the concern of Stratasys: should Nano Dimension somehow buy or gain control over another 38% of Stratasys, they would be the majority owner and can thus make any decisions they want.
If an external party intends on taking over the company in this manner, it will be stopped by the new shareholder rights plan. The idea is that if the company’s control is effectively being taken away, that’s a thing of value whose price should be separately negotiated, rather than leaving it to the market. Remember, Nano Dimension could simply buy more shares quietly on the market as time passes — or more silently buy them through subsidiaries or partners making their takeover stealthy.
I’m pretty sure the folks at the top of Stratasys were quite concerned about this announcement, and the evidence is the rather sudden appearance of the shareholder rights plan only days after the Nano Dimension announcement.
Via Stratasys
