Nano Dimension issued an extraordinarily aggressive press release regarding their latest proposal to take over Stratasys.
Fabbaloo readers will recall that Nano Dimension has been trying to use their US$1B cash hoard to take over Stratasys, one of the leading companies in the space. They’ve issued a series of offers to Stratasys stakeholders trying to entice them to hand over their shares to Nano Dimension.
The latest offer is unchanged, but requires a bit of an explanation. The company’s prior offers intended to capture 100% of Stratasys shares. However, due to the kerfuffle the value of Stratasys rose sharply to the point where Nano Dimension could no longer afford to buy 100% of Stratasys.
The latest offer instead intends to acquire at least 36% of the shares. Combined with their existing 14.5%, this would give Nano Dimension’s management full control over Stratasys.
Unfortunately, Nano Dimension bizarrely LOWERED their per-share price on the latest offer. The best prior offer was for US$20 per share, while the current offer is only for US$18.
Stratasys management has rejected all offers, and it’s clear that individual Stratasys shareholders weren’t interested in the US$20 offer, let alone a lower offer at US$18. Why Nano Dimension produced this latest offer is beyond my understanding.
Nevertheless, Nano Dimension is persistent, issuing a rather incredible press release this week “reinforcing” their latest US$18 offer in an attempt to persuade shareholders to agree.
Nano Dimension has a habit of providing radical announcements, including their infamous once-daily videos.
Analysis
There’s basically nothing new in the press release as far as the deal goes, but it includes a series of aggressive statements damning Stratasys management. Some example quotes:
“Nano demands that the Stratasys Board call an Extraordinary General Meeting of Stratasys shareholders following the completion of the $18-per-share-special-tender for the purpose of removing the majority of the Stratasys Board of Directors and replacing them with highly qualified nominees proposed by Nano.”
Presumably, the new nominees would be friendly to existing Nano Dimension management.
“Provides a premium to all relevant Stratasys historical trading levels, including a 39% premium to the unaffected 60-day VWAP as of March 3rd, 2023.”
As of this writing, Stratasys shares are US$17.77, basically the same as the offer. Last August, only nine months ago, Stratasys shares were over US$20, so I cannot understand how this can be viewed as a “premium” in any conceivable way.
“Nano has approximately $1 billion in cash and cash equivalents on hand to complete the special tender offer, which is not subject to Nano shareholder approval. The board of directors of Nano has full authority to effect the tender offer as confirmed by the Israeli courts.”
Stratasys believes the court decision did not provide this confirmation, and that the legal process is still underway.
“Nano believes urgent change is needed. Stratasys’ current Board of Directors is not fulfilling its fiduciary duties and not acting in its shareholders’ interests,”
because:
”Stratasys directors refused to negotiate with Nano, a well-funded and reputable peer that made multiple all-cash offers at compelling premia, disregarding Nano’s efforts to reach a mutually agreeable all-cash acquisition of all outstanding ordinary shares of Stratasys not currently owned by Nano.”
Since when is rejecting a proposal a breach of fiduciary duties? Especially a proposal that provides no premium at all over current stock prices?
“Stratasys directors (several of which are ex-CEOs of the company) and management have a history of empty promises to Stratasys shareholders, including making statements every two to three years that Stratasys will become a “billion-dollar company,” only to deliver further cash burn and value destruction, as evidenced by the losses on the sale of MakerBot in September 2022.”
As of this writing, Stratasys is in fact a billion dollar company, with a market cap of US$1.2B. Meanwhile, Nano Dimension’s cap is only US$0.6B, and their value has dropped much more than Stratasys’ has since last August.
Where is this going?
After seeing these recent statements and examining the situation, it’s pretty clear why Stratasys has continually rejected the repeated Nano Dimension offers and instead focused on the Desktop Metal merger and consideration of the 3D Systems offer. The Nano Dimension statements in the press release seem to be of questionable accuracy, so it’s not surprising their offers are rejected. The Nano Dimension offers appear to be constructed more on what Nano Dimension can afford, rather than Stratasys’ value.
Meanwhile, Stratasys continues to work with Desktop Metal on a proposed merger that would create an entity far larger than Nano Dimension could attempt to take over. This would be further complicated if the 3D Systems offer is also accepted, creating a 3D printing behemoth of size many times bigger than all others. It could be that Nano Dimension believes this is the last possible moment for their Stratasys takeover to work, and they’re trying everything they can to make it happen.
Via Nano Dimension
Disclosure: I used to work for Stratasys
Hoo boy, where to begin with this mess. I guess I’ll start by noting that I’ve been expecting a takeover war for a long time owing to SSYS’s historical combination of lots of cash but mediocre performance and seemingly disinterested corporate governance. Kind of sad that a company that co-invented the industry and was positioned for amazing things in the 2010s never managed to do very much with all that market leadership, but it is what it is. So Nano Dimension’s accusations have some merit, but their own position is hardly impressive outside of the nest egg and their management’s reach far exceeds its grasp. Stones and glass houses. 3D Systems’ track record should require little introduction here; a long string of lackluster products, questionable acquisitions and failed integrations. Desktop Metal is probably the most capable of the four, but they’re still riding the hype train and I’d be surprised if they managed to pull off a deal with a less exciting but more heavily scrutinized company and not wind up with someone taking a Makerbot size writeoff.
So, I don’t think there’s going to be any real winners here but it’s sure to provide a lot interesting headlines.