Stratasys has received another unsolicited takeover offer, this one a $1.2 billion bid from competitor 3D Systems, a Rock Hill, S.C.-based maker of 3-D printers.
Stratasys receives another $1B takeover bid as 3-D printer market consolidates
The company, jointly based in Eden Prairie and Israel, received an offer from 3D Systems after having already rejected multiple offers from Nano Dimension and making its own bid for another company.
June 2, 2023 at 4:42PM
The offer comes after several unsolicited bids from Israeli company Nano Dimension and Stratasys' own offer to buy Massachusetts company Desktop Metal.
3D Systems Chief Executive Jeff Graves said the 3-D printing industry is at an inflection point.
"We see significant upside for our shareholders and all stakeholders by capturing the benefits of scale, enhancing investment in innovation and delivering long-term profitable growth," Graves said in the news release on the Stratasys offer.
3D Systems' offer for Stratasys is a combination of $7.50 in cash and 1.2507 worth of newly issued shares of 3D Systems common stock for every Stratasys ordinary share.
Stratasys, which is jointly based in Eden Prairie and Rehovot, Israel, has rejected multiple takeover offers from Nano Dimension, an Israeli additive manufacturing company and its largest shareholder.
3D Systems made its offer on May 30, days after Stratasys announced it had made an offer worth about $588 million to acquire Desktop Metal, yet another 3-D printer company.
In a filing with the Securities and Exchange Commission, the Stratasys board said it would carefully review the proposal from 3D Systems while keeping in mind its own offer to acquire Desktop Metal.
Graves said in a release that the "combination of 3D Systems and Stratasys is simply the best outcome for the shareholders of both companies."
"We feel strongly that now is the time for all parties to recognize the overwhelming logic of our two businesses coming together," he said.
On the same day as the 3D Systems offer, the Stratasys board of directors rejected the latest proposal from Nano Dimension.
According to Brian Drab, an analyst for William Blair & Co. who covers companies in the additive manufacturing industry, 3D Systems' offer is roughly equivalent to the three offers made by Nano Dimension.
"We believe 3D Systems, observing the messy situation Stratasys has found itself in, is being opportunistic, making an offer Stratasys shareholders may view as the best of three suboptimal options," Drab wrote in an email. "We do believe 3D Systems would ultimately have to pay more than $18 a share to close a deal."
3D Systems acknowledged the offers from Nano Dimension and said in the news release that its offer represented a 35% premium to Stratasys' stock price on March 9, the day before Nano Dimension made its initial offer for Stratasys. The share price of Stratasys closed at $14.01 on March 9.
The offer from 3D Systems is a mix of cash and equity while Nano's offers have been all-cash offers.
The 3-D printing industry is consolidating as the promise of the industry continues to grow. Technology has improved to where the 3-D printers can make production-level parts at scale rather than just for prototypes and testing purposes.
Over the years, both Stratasys and 3D Systems have used acquisitions to build their position in the market and to complement or add to their existing technologies.
Share prices of most 3-D printing companies are off significantly from prices two years ago and seem to be driving deal activity in the space.
"What seems to be driving the current saga is the current low price of most 3-D printing companies," said Michael Molitch-Hou, editor in chief of 3DPrint.com. "Given the financial hardships faced by the industry, anyone with enough cash could potentially buy out these firms."
3D Systems had annual revenue of $538 million in 2022, down 12.6% from the prior year. But it is bigger and has a longer history than Nano Dimension, which had revenue of just $43.6 million.
Stratasys had revenue last year of $651.5 million, up 7.3% from 2022. Stratasys has focused on being a leader in the polymer 3-D printing space. 3D Systems has plastic and metal 3-D printers.
The multiple offers are complicated by the fact Nano Dimension owns 14.3% of Stratasys shares and is the largest shareholder of Stratasys.
Plus, Stratasys' recent offer for Desktop Metal comes with a deal termination agreement where Stratasys would have to pay a $32.5 million fee to cancel the deal with Desktop Metal.
Both 3D Systems and Desktop Metal each announced layoffs earlier this year. On 3D Systems' first quarter earnings call, company officials said they would be reducing head count by 6%, while in February Desktop Metal had announced a 15% cut to its employee base.
Shares of Stratasys were up 11.2% Friday to close at $16.21.
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