Will Nano Dimension succeed in acquiring 15 times larger Stratasys by revenue? In an explanation of the takeover bid, the management writes to the top management of Stratasys that it wants to arrange the takeover in mutual consultation. A year ago Yoav Stern, CEO, said that building a stake in Stratasys should not necessarily be seen as an ambition to acquire Stratasys.
The question is whether Stratasys wants to be taken over. Last year, when Nano Dimension was in the process of buying Stratasys stock, it provided a poison[pill]to deflect a hostile takeover. This expires in the summer. Stratasys is currently leaving it at the response that it will study the offer thoroughly. Last year, Nano Dimension already bought NanoFabrica, Global Inkjet Systems, Admatec/Formatec, Essemtec and DeepCube and acquired a 12% stake in Stratasys.[pilgezorgdomeenvijandigeovernametekunnenafwentelenDezeloopttegendezomerafStratasyslaathetmomenteelbijdereactiedathethetbodgrondigzalbestuderenVorigjaarkochtNanoDimensionalNanoFabricaGlobalInkjetSystemsAdmatec/FormatecEssemtecenDeepCubeenhetverwierfheteenbelangvan12%inStratasys
What does Nano Dimension see in merging with Stratasys?
First the business facts. Israeli Nano Dimension, known for its 3D electronics printers and in the Benelux for Admatec, is willing to pay $18 in cash for each Stratasys share. That is 36% above the price of March 1. In total, the transaction is worth $1.1 billion. According to the acquiring party, the two companies together can create more value in both the short and long term. The combination offers an unprecedented platform of 3D printing technologies for polymers as well as for electronics, micro-components and high-end ceramic materials. Stratasys R&D can benefit from DeepCube, Nano Dimension’s AI group. By combining their sales (which is in fact already the case in the Benelux), the two companies can realize cross-selling and address new customer groups with the various platforms. In terms of costs, the necessary synergy benefits can be booked and the combination of both companies can grow strongly and be profitable. “In recent years, the AM market has grown in size and technological advancements have boomed. Bringing Stratasys and Nano Dimension together is intended to position both companies to be successful as a combined company and lead the industry into that next phase,” the offer notes said.
Praise for Stratasy’s top management
Nano Dimension owns 14.5% of the shares of Stratasys. In the further explanation, the company’s board mainly praises the senior management of Stratasys and the results achieved in recent years. It therefore wants Yoav Zeif, CEO, to commit to the merged company for several years following the acquisition, together with other top managers. The Israeli company currently has $1 billion in cash and is debt free. It can therefore complete the transaction entirely in cash, without being dependent on external financiers. Last year it posted sales of approximately $43 million. Yoav Stern, CEO of Nano Dimension, explains in a YouTube video why it wants to combine the two companies.
Shareholder protest
Meanwhile, things are rumbling in Nano Dimension’s own shareholder camp. One of the investors, the Anson Funds, even issued a press release calling for the takeover to be stopped. Anson writes:
Our primary and immediate concern is that the Company will use most of its cash for the proposed unsolicited acquisition of Stratasys. Anson does not support this transaction in light of ongoing proxy competition. It is clear that the Board of Directors is acting unilaterally once morest the will of the company’s shareholders, digging in and making an effort to prevent shareholders from voting.
It is particularly disturbing that Nano Dimension wants to push through the deal outside its own shareholders. To then deliver another big blow to the management of Nano Dimension:
We believe it is this level of management arrogance that is causing Nano Dimension to trade at a staggering and permanent 31% cash and investment discount.
Stratasys recently released its past quarter and full-year 2022 results. In Q4, sales were 4.6% lower, due to divestments (Makerbot). For all of 2022, revenue increased 7.3% to $651.5 million and a net loss of $29 million.
