Filed
by 3D Systems Corporation
pursuant to Rule 425 under the U.S. Securities
Act of 1933, as amended,
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of
1934, as amended
Subject Company: Stratasys Ltd.
Commission File No.: 001-35751
3D Systems Supports Leading Proxy Advisor ISS’ Recommendation AGAINST
Stratasys’ Planned All-Stock Merger with Desktop Metal
Recommendation to Reject the Desktop Metal Merger Based on the Availability of a Superior Alternative
to Merge with 3D Systems for Stock and CashISS
Raises Serious Questions About Stratasys’ Failure to Focus on Shareholder Value ROCK
HILL, S.C., Sept. 21, 2023 (GLOBE NEWSWIRE) -- 3D Systems (NYSE:DDD) (the “Company”)
issued the following public letter to shareholders of Stratasys Ltd. (NASDAQ: SSYS) (“Stratasys”)
after leading independent proxy advisor, Institutional Shareholder Services (“ISS”),
recommended that Stratasys shareholders vote AGAINST Stratasys’ planned acquisition
of Desktop Metal (NYSE: DM) ahead of its September 28, 2023 Extraordinary General Meeting
of Shareholders (“EGM”) to vote on the Desktop Metal transaction.
ISS
discussed its recommendation in a detailed, 9-page analysis that concluded:
[I]t
is not clear that [the Desktop Metal merger] creates value for SSYS shareholders. DDD’s
alternative offer to acquire [Stratasys], by contrast, presents a more convincing route to
value creation for SSYS shareholders.1
The
full text of 3D Systems’ letter is as follows:
Stratasys
Shareholders,
You
have a critical decision to make on September 28th about the future of Stratasys:
1.
Vote FOR the planned all-stock merger with Desktop Metal, a transaction that would
massively dilute Stratasys shareholders only to rescue an amalgamation of deteriorating additive
manufacturing (“AM”) businesses rapidly cobbled together in 2021.
-
Or -
2.
Vote AGAINST the Desktop Metal transaction to send a clear message to the Stratasys
Board of Directors to accept the superior cash and stock offer from 3D Systems. The transaction
with 3D Systems would provide Stratasys shareholders with approximately $509 million of upfront
cash consideration and ownership of 46% of the combined company, featuring a scaled platform
with industry-leading revenues, highly attractive gross margins, positive EBITDA and attractive
upside exposure to its high-growth regenerative medicine platform.
In
a report to Stratasys shareholders published on September 20, 2023, leading proxy advisory
firm ISS recommended that Stratasys shareholders vote AGAINST the proposed merger with Desktop
Metal. In its report, ISS presented the two key questions shareholders must ask when making
their choice: “Which player is best suited to drive consolidation in the struggling
3D printing industry, and which combination offers the most favorable terms for SSYS shareholders.”
ISS’
analysis found that 3D Systems’ binding offer presents Stratasys with a clear path
to scale and the most favorable terms possible to create significant value for Stratasys
shareholders when compared to the proposed transaction with Desktop Metal. 3D Systems supports
this determination by ISS, as it emphasizes many of the points that 3D Systems has consistently
raised to the market in relation to maintaining and increasing value for shareholders of
the proposed combined company. 3D Systems encourages Stratasys shareholders to consider the
facts when making this critical decision about the future of Stratasys.
ISS
Report Brings Important Issues to Light
The
ISS report highlighted several key issues for shareholders to consider:
Issue
1: 3D Systems’ Offer for Stratasys Creates Clear Value for Stratasys Shareholders,
While a Transaction with Desktop Metal Does Not
“While
the proposed [DM] transaction does not appear to be value-destructive, it is not clear that
it creates value for SSYS shareholders. DDD's alternative offer to acquire the company, by
contrast, presents a more convincing route to value creation for SSYS shareholders. Market
reaction to the proposed transaction was negative; reaction to all public DDD offers has
been positive, at least prior to rejection by SSYS.”
Issue
2: Stratasys’ Engagement with 3D Systems Was Highly Unusual
"Shareholders
can reasonably question the unusual turn of events following SSYS' determination that DDD's
proposal may result in a ‘superior proposal.’
It is reasonable for shareholders
to expect that a determination that the DDD proposal constituted a superior offer could soon
follow the SSYS board's statement that such an outcome could reasonably be expected. It is
unusual for a "superior proposal" determination not to follow an earlier statement that a
superior proposal would reasonably be expected.”
Issue
3: Stratasys’ Current Management Seems More Interested in Self Preservation Than Delivering
Shareholder Value
“Criticism
of DDD management and concern about post-management roles for SSYS management, while possibly
justified to some extent, may suggest that unsatisfactory post-transaction roles for its
management could have been a reason that SSYS did not ultimately deem DDD's proposal a superior
proposal. In any case, shareholders should expect that transaction negotiations should first
focus on a joint plan to create shareholder value through a transaction, and only after such
plan had been agreed upon by the parties, to begin discussions about which individuals are
best suited to execute such a plan.”
Altogether,
ISS’ report is a meaningful rebuke of Stratasys’ management and Board’s
ability to act in the best interest of its shareholders.
3D
Systems’ Cash and Stock Offer is Superior to the Proposed All-Stock Desktop Metal Merger
in Every Way, and the Market Agrees
Stratasys
has definitively stated it believes a combination with Desktop Metal is the best path forward
for Stratasys to lead mass production in the additive manufacturing industry. Yet, Stratasys
refuses to compare its combination with Desktop Metal on a side-by-side basis to 3D Systems’
binding offer, as ISS did in its report.
It
is clear that Stratasys does NOT want shareholders to view these two transactions as comparable,
however, ISS recognizes that the two transactions should be compared head-to-head. Since
the strategic rationale for each merger is essentially identical, the relative benefits to
Stratasys shareholders from each deal should be all that matters.
The
facts plainly show that if the Board of Stratasys truly believes in its stated strategic
rationale for pursuing a transaction, then the ONLY choice that benefits shareholders is
a combination with 3D Systems. It defies logic to call on shareholders to support the
rationale of a Desktop Metal transaction while at the same time rejecting a 3D Systems offer.
The
market sees eye-to-eye with 3D Systems on the strategic advantages of its proposal to combine
with Stratasys, as ISS noted in its report. On the trading day following each proposed offer
announcement from 3D Systems, Stratasys shares gained 11.3%, 6.2%, and 9.0%, respectively.
Conversely, on the day of Stratasys’ announcement of a proposed Desktop Metal transaction,
Stratasys shares fell 4.2%. ISS further noted the significance of these market reactions
by contrasting them with general market movements in the sector on those days.
It
is clear that the 3D Systems deal is superior to the Desktop Metal transaction in terms of
strategic rationale and shareholder value. In support of this fact, and as a commitment to
Stratasys shareholders to present a certain, superior and actionable alternative, 3D Systems
has executed and deposited into escrow a binding merger agreement which remains available
to be countersigned by Stratasys following termination of its merger agreement with Desktop
Metal. Additionally, 3D Systems has committed to pay the full amount of any termination fees
due to Desktop Metal upon the termination of the Desktop Metal merger agreement and Stratasys’
countersignature of the 3D Systems merger agreement.
Now
is the time for Stratasys shareholders to send an unequivocal message to the Board to stop
protecting itself and start securing real value. A vote against the Desktop Metal transaction
will, as expressly recommended by ISS, send a clear message to the Stratasys Board of Directors
to accept 3D Systems’ binding offer. 3D Systems’ merger agreement offers Stratasys
the ability to enter into a transaction that creates unparalleled scale, significant cost
synergies to enhance financial performance and opportunities to invest in long-term growth.
Vote
AGAINST the Desktop Metal deal today.
Other
materials related to the upcoming Stratasys shareholder vote, including 3D Systems’
latest signed merger agreement delivered to Stratasys are available at: https://investor.3dsystems.com/overview/default.aspx.
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 Systems
More
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
Statements
Certain
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 was filed by 3D Systems on September 13, 2023 with
the SEC on Form 8-K.
Additional
Information
This
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,
prospectuses or other documents with the SEC. This communication is not a substitute for
any registration statement, proxy 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 registration statement(s),
proxy statement(s), tender offer statement(s), prospectus(es) 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, prospectuses 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.
Contacts
Investors:
3D
Systems
investor.relations@3dsystems.com
MacKenzie
Partners, Inc.
Dan Burch / Bob Marese
dburch@mackenziepartners.com / bmarese@mackenziepartners.com
U.S.
Media:
FTI Consulting
Pat Tucker / Rachel Chesley / Kyla MacLennan
3DSystems@fticonsulting.com
Israel
Media:
Gelbart-Kahana Investor Relations
Aviram Uzi
aviram@gk-biz.com
+972-525329103
_____________________
1
Permission to quote ISS was neither sought nor obtained.
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