3D Systems (NYSE:DDD) today announced the delivery of a revised
proposal to combine with Stratasys Ltd. (NASDAQ: SSYS). Each
Stratasys share will convert into $7.00 in cash and ownership of
46% of the aggregate shares of the combined company (representing a
1.6387 exchange ratio based on the last disclosed Stratasys share
count). 3D Systems believes this consideration mix is worth more
than $27 per share to Stratasys shareholders inclusive of
synergies.1
The revised offer results from discussions between the two
companies and addresses feedback provided by Stratasys during an
in-person meeting between directors of both companies on August 22,
2023. Stratasys has responded to this proposal by acknowledging
that its diligence has confirmed material cost synergies arising
from a combination that would translate into hundreds of millions
of dollars of shareholder value, but concluded that the current
spot price of 3D Systems shares renders the proposal inadequate. In
addition, Stratasys has informed 3D Systems that, despite 3D
Systems’ good faith efforts to reach a negotiated transaction for
the benefit of all shareholders, Stratasys’ board of directors
continues to support the Desktop Metal merger as its preferred
alternative and that the Stratasys board is not interested in any
further discussions with or proposals from 3D Systems about a
combination.
President and CEO Dr. Jeffrey Graves stated, “We listened to
shareholder feedback and made a strong effort to reach a friendly
transaction but it seems there is no price that would satisfy the
Stratasys Board. Shareholders of Stratasys have seen their board
turn down offer after offer, watching only the consistent
destruction of value in the meantime. The latest game appears to be
an attempt to ‘run out the clock’ on supposed discussions with us,
while always moving ahead with the massively value-destructive
merger with Desktop Metal. We are confident that shareholders will
support our combination and send an unequivocal message to the
Stratasys board that they can no longer protect themselves while
fiddling away shareholder value.” The full terms of 3D Systems’
revised proposal to Stratasys were included in a merger agreement,
together with a full set of disclosure schedules, delivered to
Stratasys on September 6, 2023, that built upon the terms of the
binding merger agreement submitted on July 13, 2023 and filed
publicly with the SEC. Updates to the July 13 offer are:
- Superior Consideration: In response to
Stratasys’ request for a consideration mix consisting of less cash
and a higher percentage of stock, in large part in order to permit
Stratasys shareholders to participate in more of the upside of the
agreed-upon synergies, 3D Systems proposes that Stratasys
shareholders receive, for each of their shares, $7.00 in cash and
46% ownership (an exchange ratio of 1.6387 based on the last share
count disclosure) of the combined company as compared to 44% in 3D
Systems’ July 13 offer.
- Certainty of Closing: The revised offer
includes a reverse termination fee of $50 million payable to
Stratasys in the event the merger does not receive required
antitrust clearances, demonstrating 3D Systems’ confidence in
obtaining all such clearances.
- Retention of Key Talent: 3D Systems recognizes
the critical role that management, employees and other key
contributors of both Stratasys and 3D Systems will play in driving
value creation at the combined company and proposes to create a $10
million retention program, to be allocated among employees of each
company on an inverse basis to the projected pro forma ownership by
their respective shareholders.
- Management: 3D Systems responded affirmatively
to Stratasys’ request for a key leadership role for Stratasys’
current Chief Executive Officer with the combined company to help
ensure a smooth integration of the two companies that will maximize
short- and long-term value creation for shareholders.
All other terms outlined in 3D Systems’ revised proposal remain
substantially the same as those included in the July 13 signed
merger agreement. This includes the commitment by 3D Systems to pay
the $32.5 million termination fee owed by Stratasys to Desktop
Metal upon Stratasys’ exit from its existing merger agreement with
Desktop Metal and entrance into this new merger agreement with 3D
Systems.
The Company reiterates its view of the key benefits of its
proposed transaction with Stratasys:
- Scale Drives Leadership: Delivers immediate
scale for leadership in the rapidly growing and fragmented additive
manufacturing industry. This includes 3D Systems’ strong, ongoing
25-year partnership with Align Technology, publicly reaffirmed on
September 7, 2023, where the Company provides hardware, materials,
processing, and services for Align in connection with its highly
efficient indirect production of aligners. Align operates hundreds
of 3D Systems’ printers producing over one million parts daily and
continues to rely on 3D Systems to support its operations.
- Complementary Technology Portfolio:
Combination of proven technologies with limited overlap, creating a
combined portfolio better positioned to service nearly every
vertical in the 3D printing market today.
- Significant Cost Synergies: Highly certain
value creation potential through realization of at least $110
million in cost synergies across SG&A savings, R&D
integration and COGS optimization, in addition to significant
revenue opportunities not currently included in 3D Systems’ pro
forma valuation analysis.
- Industry Leading Financial Profile: Estimated
LTM combined revenue of $1.2 billion and ~12% EBITDA margin, and no
debt or equity financing contemplated.
- Meaningful Growth Opportunities from Regenerative
Medicine: Unmatched bioprinting leadership potential, with
a clear road map for human applications, including human trials for
3D printed lungs anticipated by 2026.
Dr. Graves continued, “This proposal demonstrates our continued,
unwavering belief that a combination of 3D Systems and Stratasys
brings unique value. It creates unparalleled scale, significant
cost synergies to enhance financial performance and supports
long-term growth investments, and a comprehensive technology
portfolio to support customers as they increasingly adopt 3D
printing in their production environments. We believe that a
combination of our two companies is clearly superior to any other
potential combination in our industry, and that the vast majority
of shareholders in both companies share our view. We will continue
to evaluate our options in completing this important transaction to
transform the additive manufacturing industry.”
Goldman Sachs & Co. LLC is acting as exclusive financial
advisor and Freshfields Bruckhaus Deringer (US) LLP, together with
Herzog, Fox & Neeman in Israel, is acting as legal counsel to
3D Systems.
About 3D SystemsMore than 35 years ago, 3D
Systems brought the innovation of 3D printing to the manufacturing
industry. Today, as the leading additive manufacturing solutions
partner, we bring innovation, performance, and reliability to every
interaction – empowering our customers to create products and
business models never before possible. Thanks to our unique
offering of hardware, software, materials, and services, each
application-specific solution is powered by the expertise of our
application engineers who collaborate with customers to transform
how they deliver their products and services. 3D Systems’ solutions
address a variety of advanced applications in healthcare and
industrial markets such as medical and dental, aerospace &
defense, automotive, and durable goods. More information on the
company is available at www.3DSystems.com.
Forward-Looking StatementsCertain statements
made in this document that are not statements of historical or
current facts are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of the company to be materially
different from historical results or from any future results or
projections expressed or implied by such forward-looking
statements. In many cases, forward-looking statements can be
identified by terms such as “believes,” “belief,” “expects,” “may,”
“will,” “estimates,” “intends,” “anticipates” or “plans” or the
negative of these terms or other comparable terminology.
Forward-looking statements are based upon management’s beliefs,
assumptions and current expectations and may include comments as to
the company’s beliefs and expectations as to future events and
trends affecting its business and are necessarily subject to
uncertainties, many of which are outside the control of the
company. The factors described under the headings “Forward-Looking
Statements” and “Risk Factors” in the company’s periodic filings
with the SEC, as well as other factors, could cause actual results
to differ materially from those reflected or predicted in
forward-looking statements. In particular, we note that there is no
assurance that a definitive agreement for the transaction
referenced in this document will be entered into or consummated or
that integration will be successful or synergies will be realized
if such transaction were to be consummated. In addition, we note
that Stratasys is not able to countersign a merger agreement with
3D Systems without first terminating Stratasys’ merger agreement
with Desktop Metal, Inc. (“Desktop Metal”) and that the mutual
consent of both Stratasys and Desktop Metal is necessary for
termination of the Desktop Metal merger agreement. We also note
that Stratasys continues to recommend in favor of the Desktop Metal
merger agreement, which remains in full force and effect, and that
the vote by Stratasys shareholders on the Desktop Metal merger
agreement has not yet occurred but is scheduled for September 28,
2023 based on Stratasys’ public filings. Business combination
proposals, transactions and integrations are subject to numerous
risks and uncertainties. Although management believes that the
expectations reflected in the forward-looking statements are
reasonable, forward-looking statements are not, and should not be
relied upon as a guarantee of future performance or results, nor
will they necessarily prove to be accurate indications of the times
at which such performance or results will be achieved. The
forward-looking statements included are made only as of the date of
the statement. 3D Systems undertakes no obligation to update or
revise any forward-looking statements made by management or on its
behalf, whether as a result of future developments, subsequent
events or circumstances, or otherwise, except as required by
law.
All references to the binding nature of the offer and merger
agreement being proposed by 3D Systems, whether in a press release,
presentation, other document or public statement, are subject to
the contents of the escrow letter that has been delivered to
Stratasys and will be on file publicly with the SEC.
Additional InformationThis communication does
not constitute an offer to buy or sell or the solicitation of an
offer to sell or buy any securities. This communication relates to
a proposal which 3D Systems has made for a business
combination with Stratasys. In furtherance of this proposal and
subject to future developments, 3D Systems (and, if a negotiated
transaction is agreed, Stratasys) may file one or more
registration statements, proxy statements, tender offer statements
or other documents with the SEC. This communication is not a
substitute for any proxy statement, registration statement, tender
offer statement, prospectus or other document that 3D
Systems and/or Stratasys may file with the SEC
in connection with the proposed transaction. Investors and security
holders of 3D Systems and Stratasys are urged
to read the proxy statement(s), registration statement, tender
offer statement, prospectus and/or other documents filed with
the SEC carefully in their entirety if and when they
become available as they will contain important information about
the proposed transaction. Any definitive proxy statement(s), tender
offer statement(s) or prospectus(es) (if and when available) will
be mailed to stockholders of 3D Systems and/or Stratasys,
as applicable. Investors and security holders will be able to
obtain free copies of these documents (if and when available) and
other documents filed with the SEC by 3D Systems through
the web site maintained by the SEC at http://www.sec.gov.
This document shall not constitute an offer to buy or sell or
the solicitation of an offer to sell or buy any securities, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10
of the U.S. Securities Act of 1933, as amended.
This communication is neither a solicitation of a proxy nor a
substitute for any proxy statement or other filings that may be
made with the SEC. Nonetheless, 3D Systems and its
directors and executive officers and other members of management
and employees may be deemed to be participants in the solicitation
of proxies in respect of the proposed transaction. You can find
information about 3D Systems’ executive officers and
directors in 3D Systems’ definitive proxy statement filed with
the SEC on April 5, 2023. Additional information
regarding the interests of such potential participants will be
included in one or more registration statements, proxy statements,
tender offer statements or other documents filed with
the SEC if and when they become available. These
documents (if and when available) may be obtained free of charge
from the SEC’s website at http://www.sec.gov.
ContactsInvestors:3D
Systemsinvestor.relations@3dsystems.com
MacKenzie Partners, Inc.Dan Burch / Bob
Maresedburch@mackenziepartners.com /
bmarese@mackenziepartners.com
U.S. Media:FTI ConsultingPat Tucker / Rachel Chesley / Kyla
MacLennan3DSystems@fticonsulting.com
Israel Media:Gelbart-Kahana Investor RelationsAviram
Uziaviram@gk-biz.com+972-525329103
________________________
1 Analysis assumes approximately 72.8mm Stratasys fully diluted
shares outstanding and 140.0mm 3D Systems fully diluted shares
outstanding. Assumes 46.00% Stratasys pro forma ownership in the
combined company. Capitalized value of synergies per share equals:
$110mm cost synergies, as projected by 3D Systems, multiplied by
15x, multiplied by 46% Stratasys ownership in pro forma entity,
divided by Stratasys fully diluted shares outstanding.
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