On Monday I had the naive thought that the Nano Dimension / Stratasys saga would be over. I was wrong.
Nano Dimension has spent months trying to acquire Stratasys through a variety of offers to that company’s shareholders, all of which have failed. As their offers appeared, each attempted a different approach, sometimes making the offer more attractive to Stratasys shareholders, but at other times not so much.
These offers are all based on Nano Dimension’s large cash hoard of about US$1B, which they intend to use to scoop up sufficient Stratasys shares to gain control over the company. However, as time passes the valuation of Stratasys has been rising — likely due to the intense publicity of this campaign — and Nano Dimension has had to rework their offers accordingly.
Their most recent offer, which I thought would be their last, proposed a per-share award of less than they had previously offered. It’s not surprising it did not gain much attention from Stratasys shareholders. My thought was that this could be the end of the line for Nano Dimension’s takeover campaign, as the stakes were rising to the point where they may not have sufficient cash to proceed.
Surprisingly, Nano Dimension yesterday updated their proposal by US$2 per share. This matches it to prior offers, possibly making it somewhat more attractive to Stratasys shareholders. They’ve also extended the offer from Monday’s deadline to now the 24th of July — another month.
Meanwhile, Stratasys continues to increase in value, gradually decreasing the attractiveness of Nano Dimension’s offers. As you can see in this chart of the past year for Stratasys, the company has been rising in value since the takeover campaign began in the early spring.
Also to note on the chart is that Stratasys was worth nearly US$22 per share not even a year ago. To propose that a US$20 per share offer is a premium is questionable, as Stratasys could easily regain lost ground. To me, a proper premium would be at the least US$25 per share, or maybe even more. It must be at a level that Stratasys shareholders believe the company could not achieve without the assistance of Nano Dimension, otherwise they’ll just get there eventually anyway.
It seems to me that Nano Dimension’s repeated offers are all designed around their own levels of affordability, and ignore the shareholder’s view.
Complicating matters is that Stratasys has been devising moves of their own, as they’ve struck what seems to be a reasonable deal with Desktop Metal to merge operations and create a much larger company — one that would surely be out of financial reach by Nano Dimension.
But wait, there’s more. 3D Systems and Stratasys have apparently been having merger discussions for a very long time, and this became known publicly only recently. 3D Systems offered a deal to take over Stratasys a couple of weeks ago, but it was rejected by the Stratasys board of directors. However, yesterday 3D Systems has also upped their offer, which would pay Stratasys shareholders some cash and leave them with 3D Systems shares.
For Stratasys this is beginning to look like an auction, with bidders raising their offers week by week. That’s good news for Stratasys shareholders for sure, but the result of these consolidations could be less good for 3D printer buyers.
Another factor in evaluating these merger proposals is that when the smoke clears, you will have a much larger company with unknown valuation. For example, in the 3D Systems proposal, Stratasys shareholders would end up with some shares of a bigger 3D Systems. What would the valuation of that larger company be? Would it be simply the addition of the two valuations? Or less if investors don’t see good things in the merger? Or could it be more if it seems the larger company will grow significantly due to its massive share resources?
I had thought this situation would resolve itself this week, but apparently not.
