3D Systems sets forth an enhanced proposal to merge with Stratasys

Image credit: Stratasys

3D Systems has submitted an improved proposal to Stratasys’ Board of Directors, which would combine the firms in a cash and stock transaction, converting each Stratasys ordinary share into $7.50 in cash and 1.3223 newly issued shares of 3D Systems stock. 

Under the enhanced offer, Stratasys stockholders would own approximately 41 per cent of the merged firm and receive approximately USD 540 million (AUD 817 million) in cash upon acquisition completion, 3D Systems revealed in a press release. 

This is in response to Stratasys’ earlier rejection, but 3D Systems claims that its proposal from 27 June represents significant improvements over the one it submitted on 30 May 2023. 

This has been emphasised in previous conversations between the management teams of 3D Systems and Stratasys, including a diligence meeting in September 2022.

In its initial rejection, 3D Systems stated that Stratasys “relies on assumptions that are unfounded and unreasonable in order to claim its acquisition of Desktop Metal will create significant value.” 

According to the enhanced proposal, inclusive of estimated cost synergies, 3D Systems implies a value of at least about $26 per Stratasys share or a value uplift of nearly 71 per cent. 

3D Systems would also consider allowing Stratasys shareholders to select their preferred consideration mix, subject to standard constraints on the total amount of cash and stock included in the deal.

The proposal also outlined Stratsys’ ability to enter into a definitive merger agreement on conditions that provide at least as much transaction certainty to Stratasys shareholders as the existing all-stock merger agreement with Desktop Metal. 

Unlike the proposed Stratasys-Desktop Metal merger, no CFIUS or ITAR approvals are required, and there is continued confidence that all applicable regulatory clearances will be achieved.

3D Systems President and CEO Dr Jeffrey Graves stated, “We are resolute in pursuing a friendly combination of 3D Systems and Stratasys. It is clear to us that we have presented the Stratasys Board with a superior proposal to the proposed Desktop Metal transaction.”

Graves said there is no better chance to utilise the complementary strengths of the company’s portfolio to build a revolutionary AM leader with unrivalled global scale, adding that “we are encouraged by the overwhelmingly positive response we’ve received from the market.”

Lastly, the transaction will produce an estimated USD 1.2 billion (AUD 1.8 billion) in LTM combined sales, with about USD 150 million (AUD 227 million) in pro forma cash on the balance sheet of the merged firm and a combined 12 per cent EBITDA margin, with no debt or equity financing planned. 

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