Nano Dimension Ousts Yoav Stern with New CEO

For the latest development on 12/27/24, see an update at the end of this article: Electronics 3D printing and roll-up firm Nano Dimension (Nasdaq: NNDM) continues to face hurdles as it embarks on the acquisitions of additive manufacturing (AM) competitors Desktop Metal (NYSE: DM) and Markforged (NYSE: MKFG). Recent developments include the influence of activist shareholder Murchinson Ltd., which has successfully placed four representatives on Nano Dimension’s board, potentially altering the trajectory of its mergers and acquisitions (M&A) strategy.

A Shift in the Boardroom

At Nano Dimension’s Annual General Meeting on December 6, 2024, shareholders elected Ofir Baharav and Robert Pons to the board, replacing Yoav Stern and General Michael Garrett as directors. In addition, a November 21 Israeli court ruling installed Murchinson nominees Kenneth Traub and Dr. Joshua Rosensweig as board members, further amplifying the activist shareholder’s influence. Dr. Yoav Nissan-Cohen, Chairman of the Board, commented on the leadership changes, stating:

“I want to thank Mr. Yoav Stern and General Michael Garrett for their service as directors on our Board as well as their expertise and guidance in developing our strategy and positioning Nano for the future. Yoav Stern continues to serve Nano as its Chief Executive Officer.”

The recent board changes also underscore shifts in governance, with shareholders rejecting proposals to de-stagger the board and modifying CEO Yoav Stern’s compensation package. While the board appears divided, these moves reflect an alignment with investor concerns about accountability and leadership direction.

The Murchinson Effect on Strategic Growth

Murchinson’s presence raises critical questions about the future of Nano Dimension’s high-profile acquisitions. Both the Desktop Metal and Markforged deals have been structured as all-cash transactions, with the former gaining overwhelming shareholder approval on October 3, 2024. These acquisitions represent a critical step in Nano Dimension’s ambition to become a dominant force in AM, consolidating technologies like binder jetting and 3D-printed electronics to target high-growth markets such as aerospace and defense.

However, Murchinson’s track record of challenging leadership and strategy raises concerns about whether these acquisitions will proceed as planned. Industry analysts like Troy Jensen, Managing Partner at Cantor Fitzgerald, have noted the critical role these transactions play in positioning Nano Dimension competitively, but Murchinson’s growing control could introduce disruptions. Jensen wrote in a newsletter:

“The question I have is what is Murchinson planning on doing now with 4 activist appointed board members sitting on NNDM’s board. Some fear they are going to try to bust the DM and MKFG acquisitions, but both transactions were all cash and DM and MKFG shareholders have both approved the transaction. I am by no means an expert with M&A law but will be watching patiently to see what transpires next.”

Financial and Operational Highlights

Nano Dimension’s Q3 2024 financial results highlight growth in the core business, with revenues increasing by 21% year-over-year to $14.7 million. Gross margins improved to 48% due to tighter cost controls under the “Reshaping Nano” initiative launched in 2023. However, the company continues to operate at a net loss, emphasizing the importance of scaling through its M&A strategy to achieve profitability.

The planned integration of Desktop Metal and Markforged could elevate Nano Dimension’s annual revenue to $340 million, based on 2023 figures. Julien Lederman, Vice President of Corporate Development, emphasized the significance of these acquisitions, stating in an interview with 3DPrint.com:

“The combined product portfolios will position Nano Dimension as a top player in advanced manufacturing. Also, we are focusing on high-performance applications for industries like aerospace and defense, automotive, and medical.”

Legal and Shareholder Dynamics

The Israeli court’s November 21 ruling validated Murchinson’s role in shaping Nano Dimension’s corporate governance, including amendments to the company’s articles of association. These changes empower shareholders to remove board members by a simple majority, marking a significant shift in shareholder rights.

Murchinson’s own history of regulatory scrutiny, however, casts doubt on its long-term intentions. The firm has faced charges from the U.S. Securities and Exchange Commission (SEC) for short-selling violations, including “mismarking” sales as long when they were short positions. In a settlement with the SEC, Murchinson paid over $8 million in penalties. Such actions suggest a pattern of behavior that raises questions about the firm’s ultimate objectives with Nano Dimension.

The SEC previously noted that Murchinson’s actions had potentially destabilizing effects on shareholder value in cases unrelated to Nano Dimension. This history, coupled with the firm’s aggressive tactics in court and in shareholder votes, suggests that Murchinson may prioritize short-term financial maneuvers over long-term corporate health​

Strategic Implications for the 3D Printing Sector

Nano Dimension’s acquisitions of Desktop Metal and Markforged are bold moves toward consolidating key AM technologies. However, Murchinson’s growing influence could jeopardize these strategic goals, potentially steering the company away from its vision of becoming a leader in advanced manufacturing.

Nano Dimension’s future hangs in a delicate balance. The company’s leadership shifts and shareholder dynamics underscore the challenges of navigating growth in a rapidly evolving industry. Whether it can maintain its strategic direction and realize the potential of its acquisitions will determine its place in AM.

As the 3D printing industry consolidates, Nano Dimension’s next steps could serve as a bellwether for the sector. Its ability to align board, management, and shareholder interests will be crucial in shaping its trajectory. With its Annual General Meeting behind it, the company faces a critical inflection point in its quest to redefine the sector.

Update 12/17/24

Nano Dimension Ltd. has announced a significant reorganization of its Board of Directors, effectively signaling a strategic shift in governance following the recent departure of several long-standing members. This move comes in response to the company’s annual general meeting and court proceedings, which solidified the influence of activist shareholder Murchinson Ltd. by affirming the legality of their board appointments.

Nano Dimension’s board now comprises Ofir Baharav, Robert Pons, Dr. Joshua Rosensweig, and Kenneth Traub. Previous chair Ofir Baharav has taken the reins as Chairman of the Board. Rosensweig will head the Company’s Audit Committee, while Mr. Pons will serve as Chairman of the Compensation Committee.This restructuring comes on the heels of the resignation of Dr. Yoav Nissan-Cohen, along with Eitan Ben-Eliahu, Oded Gera, Roni Kleinfeld, Chris Moran, and. Georgette Mosbacher from the board. Nissan-Cohen, who served as the Chairman of the Board, and Oded Gera were re-elected to the board in September 2023 after being removed in a previous board shakeup influenced by the activist shareholder Murchinson Ltd.​ The new composition reflects the outcomes of both the annual general meeting and a significant court ruling which validated the election of Rosensweig and Traub.

Update 12/27/24

Nano Dimension has announced a significant leadership change with Julien Lederman stepping in as Interim CEO following the immediate termination of Yoav Stern’s tenure. This development comes amidst an ongoing lawsuit filed by Desktop Metal, alleging Nano Dimension’s failure to fulfill obligations tied to their merger agreement. While the case is set for an expedited hearing, the merger’s future remains uncertain, further complicated by activist shareholder Murchinson’s influence on the board.

Additionally, the proposed mergers with Desktop Metal and Markforged, once seen as pivotal to Nano Dimension’s strategic ambitions and the overall survival of these other two firms, are now facing increasing skepticism under the evolving governance structure. These shifts could fundamentally alter Nano Dimension’s trajectory in the AM sector.

We plan to explore these developments in greater depth in the new year. Moreover, an episode of the Printing Money podcast is set for publication in early January 2024.