3D Systems and Nano Dimension Increase Offers for Stratasys Acquisitions

Two very different 3D printing entities have enhanced their two very different offers for acquiring additive manufacturing (AM) stalwart Stratasys (Nasdaq: SSYS). Whereas 3D Systems (NYSE: DDD) has improved its proposal to purchase its competitor, Nano Dimension (Nasdaq: NNDM) is increasing its tender offer to Stratasys shareholders at large in its hostile takeover attempt.

3D Systems has upped its bid from $7.50 in cash and 1.2507 newly issued shares to $7.50 in cash and 1.3223 newly issued shares, valuing Stratasys shares at $19.53 each. Nano Dimension has extended its tender offer, which was meant to expire on June 26, to July 24 and increased it from $18 per share to $20.05. The Stratasys Board of Directors, meanwhile, has remained firm in its goal of merging with Desktop Metal (NYSE: DM), though it will consider the 3D Systems offer.

A 3D Systems-Stratasys Deal

A merger with 3D Systems at this rate would see Stratasys shareholders take 41 percent of the combined company along with $540 million in cash. The proposal represents a 20.4% premium to the closing price of Stratasys stock on Monday, but a 33% premium to closing share price on May 24, 2023, the last trading day before the deal with Desktop Metal was announced.

However, 3D Systems suggests that “estimated cost synergies” brings that value up to $26 per share. That is, of course, up for debate, just as 3D Systems’ argument that the estimated cost synergies of a Stratasys-Desktop Metal merger are unrealistic. The company writes:

“Stratasys has stated the Desktop Metal transaction will result in $50 million of cost synergies. The Company does not believe that is achievable. This $50 million is incremental to the $100 million of standalone cost reductions previously announced by Desktop Metal, which equates to 60% of Desktop Metal’s 2022 operating expenses based on 3D Systems’ analysis.”

Slide courtesy of 3D Systems.

In the most recent episode of the Printing Money podcast, the hosts discuss how the sheer lethargy associated with merging the two largest pure-play 3D printing companies in the industry would likely slow down the resulting entity. As a result, any potential value from combining the two would take longer to realize.

Printing Money Episode 6: Recent 3D Printing Market Activity, with Dayton Horvath, AMT

3D Systems is hosting a replay of an investor webcast outlining the deal on its investor webpage. Slides can be found here.

A Nano Dimension-Stratasys Takeover

The Printing Money hosts also discuss the complex story that is the attempted takeover of Stratasys by Nano Dimension. In two separate articles, we discuss two important elements of that story: how Cathie Wood’s ARK Investment Management may have triggered the Israeli electronics 3D printing firm to attempt a takeover of Stratasys and the list of dubious investors have backed Nano Dimension, possibly for questionable reasons.

Nano has previously gone to the Stratasys Board to purchase the firm, but after being rejected, it has gone directly to the shareholders at large. As of June 26, only eight percent of Stratasys shares were tendered. In its tender offer extension, Nano Dimension is looking to acquire 31.9% and 36.9% of the outstanding ordinary shares of Stratasys Ltd., rather than the 38.8% and 40.8% it previously offered. This would augment its existing 14.1% ownership of Stratasys, allowing it to effectively own the company.

As discussed in our previous coverage, Nano Dimension is a much smaller firm, with revenues of about $43.6 million, looking to acquire a much larger one, with revenues of about $651.5 million. With over $1 billion in cash made by issuing additional shares on the public markets, the company would be buying out Stratasys shareholders. Nano management argues that the new deal is 54.4% premium compared to a 60-day volume-weighted average price as of March 3rd, 2023.

Stock Values Fluctuate with New Offers

All of this activity has caused a flurry of trading related to the companies’ stocks. Stratasys stock rose 3.2% in pre-market trading. In the time it took to write this article, the price has fluctuated from -5% to +6.3%. As of this sentence, 3D Systems is up 3.96%, while Nano and Desktop are down 0.22% and 0.81%.

So, regardless of who wins in the merger talks, traders can make some cash off of the long and short transactions. As we learned from examining Nano Dimension’s investors, that alone may be worth it to some of the more unscrupulous backers of the firm. Over past month, the volume of shares being traded tends to increase the most when Nano Dimension stock peaks, as shown below.

Interestingly, Stratasys’s share price rose beyond the $18 price-per-share Nano Dimension initially offered in the month since the Desktop Metal deal was announced. It’s possible that this latest news could ultimately drive the stock past $20 per share over the next month, as well. With AM’s stalwarts, Stratasys and 3D Systems, now facing a rising trend, this activity could be exactly what those firms need to be pushed into solid double-digit territory.