3D Systems (NYSE:DDD) (“the Company”) today announced an enhanced,
binding offer to combine with Stratasys Ltd. (NASDAQ: SSYS)
(“Stratasys”). Each Stratasys share will convert into $7.50 in cash
and 1.5444 shares of the combined company, representing ownership
by the Stratasys shareholders, in the aggregate, of approximately
44% of the shares of the combined company, in addition to the
approximately $540 million of aggregate cash consideration being
offered.
The binding offer by 3D Systems represents compelling value for
Stratasys shareholders by any measure:
- Implied value per Stratasys share of $24.07, based on 3D
Systems July 12, 2023 closing share price, representing a 62%
premium to the closing price per Stratasys share on May 24, 2023,
the last trading day prior to the announcement of the proposed
transaction by Stratasys with Desktop Metal.
- Implied value of approximately $28 per Stratasys share, or an
approximately 80% premium, inclusive of $100 million of mutually
identified and agreed upon cost synergies.1
- Represents a ~15% improvement to 3D Systems’ proposal submitted
to the Stratasys Board on May 30, 2023.
President and CEO Dr. Jeffrey Graves stated, “We have continued
to pursue a friendly combination with Stratasys with the objective
of maximizing value for the shareholders of both companies.
Multiple large Stratasys shareholders have reached out to inform us
that they believe a combination of 3D Systems and Stratasys is the
right path forward. This feedback affirms our conviction that we
are doing right by shareholders today by offering exceptional
value, certainty and transparency, and agreeing to pick up the
termination fee that will be payable to Desktop Metal.”
Dr. Graves continued, “We have taken every step to improve the
value, certainty and transparency of our proposal and look forward
to constructively engaging with the Stratasys Board so that we can
mutually pursue a transaction that will change the landscape of the
additive manufacturing industry for the benefit of not only
investors, but also employees and customers. We are taking this
decisive action now to remove any reasonable doubt whether 3D
Systems’ offer is likely to result in a superior proposal. While we
believe our previous offers should have constituted a superior
proposal, we are confident that this enhanced offer and signed
merger agreement unequivocally constitutes a superior proposal to
any other before Stratasys.”
Concurrently with the announcement of this binding offer, 3D
Systems has delivered to Stratasys a signed merger agreement in
escrow. This merger agreement, which lays out the details of the
merger and, as required, will be filed on Form 8-K with the SEC by
3D Systems, now awaits countersignature by Stratasys.
The terms outlined in 3D Systems’ merger agreement, including
the representations, warranties, covenants, closing conditions and
termination rights, were designed to track those in the Desktop
Metal merger agreement in order to offer Stratasys and its
shareholders at least as much certainty as the Desktop Metal
transaction. These terms include:
- 3D Systems Picks Up the Desktop Metal Termination
Fees: 3D Systems will pay, on behalf of Stratasys, the
full amount of any termination fees owing to Desktop Metal, as a
result of the failure to obtain Stratasys’ shareholder approval of
such agreement and as a result of the entrance by Stratasys into
the merger agreement with 3D Systems.
- No Financing Condition: 3D Systems will fund
the cash consideration from the pro forma balance sheet of the
combined company and, as such, the proposed merger is not subject
to any debt or equity financing condition.
- Right to Elect Form of Consideration: Each
Stratasys shareholder will have the right to elect to receive its
preferred mix of cash and stock consideration, subject to the
shareholder-friendly election, cap and proration mechanisms.
- Advantageous tax and capital markets
structure: Stratasys shareholders will receive shares of a
Delaware-incorporated, domestic SEC registrant. This transition
away from holding shares of a foreign private issuer will result in
their holding shares in an issuer with access to a significantly
broader capital markets base. Moreover, while Stratasys
shareholders will need to consult with their own tax advisors, this
structure will generally enable Stratasys shareholders to receive
the share consideration on a tax-free basis.
- Regulatory Clearance Certainty with No CFIUS
Risks: 3D Systems is confident that all applicable
regulatory clearances will be obtained and therefore makes a strong
commitment to obtain requisite regulatory clearances. In addition,
in contrast to the proposed Desktop Metal merger, no CFIUS approval
is required for the proposed combination of Stratasys and 3D
Systems.
- Removal of Unusual Desktop Metal Terms: The
Desktop Metal merger agreement contains unusual terms, including a
requirement for a number of existing contracts of Desktop Metal to
be modified or terminated in advance of closing, a provision for
the payment of a termination fee of $19 million by Stratasys to
Desktop Metal if these contracts are not modified or terminated,
and a provision that the Desktop Metal merger agreement may be
terminated if a shareholder were to hold more than 50% of either
company. The merger agreement with 3D Systems has no such
contingencies hanging over the pathway of the shareholders of both
companies to realize superior value upon consummation.
- Right of Stratasys to Terminate to Accept a Superior
Proposal: In contrast to the Desktop Metal merger
agreement, Stratasys will have the right to terminate this merger
agreement to enter into a superior proposal, ensuring that the
shareholders of Stratasys are able to receive, at the end of the
day, the best value attainable for their shares.
The Company reiterates its view of the key benefits of its
proposed transaction with Stratasys:
- Scale Drives Leadership: Delivers immediate
scale for leadership in the rapidly growing and fragmented additive
manufacturing industry.
- Complementary Technology Portfolio:
Combination of proven technologies with limited overlap, creating a
combined portfolio better positioned to service nearly every
vertical in the 3D printing market today.
- Significant Cost Synergies: Highly certain
value creation potential through realization of at least $100
million in cost synergies across SG&A savings, R&D
integration and COGS optimization, jointly identified by members of
both companies’ management teams during due diligence sessions in
September 2022, in addition to significant revenue opportunities
not currently included in 3D Systems’ pro forma valuation
analysis.
- Industry Leading Financial Profile: Estimated
LTM combined revenue of $1.2 billion and ~12% EBITDA margin2, and
no debt or equity financing contemplated.
- Meaningful Growth Opportunities from Regenerative
Medicine: Unmatched bioprinting leadership potential, with
a clear road map for human applications, including human trials for
3D printed lungs anticipated by 2026.
Goldman Sachs & Co. LLC is acting as exclusive financial
advisor and Freshfields Bruckhaus Deringer (US) LLP, together with
Herzog, Fox & Neeman in Israel, is acting as legal counsel to
3D Systems.
For accompanying slides, please visit the Company’s website.
About 3D Systems
More than 35 years ago, 3D Systems brought the innovation of 3D
printing to the manufacturing industry. Today, as the leading
additive manufacturing solutions partner, we bring innovation,
performance, and reliability to every interaction – empowering our
customers to create products and business models never before
possible. Thanks to our unique offering of hardware, software,
materials, and services, each application-specific solution is
powered by the expertise of our application engineers who
collaborate with customers to transform how they deliver their
products and services. 3D Systems’ solutions address a variety of
advanced applications in healthcare and industrial markets such as
medical and dental, aerospace & defense, automotive, and
durable goods. More information on the company is available at
www.3DSystems.com.
Forward-Looking Statements
Certain statements made in this document that are not statements
of historical or current facts are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the company to be
materially different from historical results or from any future
results or projections expressed or implied by such forward-looking
statements. In many cases, forward-looking statements can be
identified by terms such as “believes,” “belief,” “expects,” “may,”
“will,” “estimates,” “intends,” “anticipates” or “plans” or the
negative of these terms or other comparable terminology.
Forward-looking statements are based upon management’s beliefs,
assumptions and current expectations and may include comments as to
the company’s beliefs and expectations as to future events and
trends affecting its business and are necessarily subject to
uncertainties, many of which are outside the control of the
company. The factors described under the headings “Forward-Looking
Statements” and “Risk Factors” in the company’s periodic filings
with the Securities and Exchange Commission, as well as other
factors, could cause actual results to differ materially from those
reflected or predicted in forward-looking statements. In
particular, we note that there is no assurance that a definitive
agreement for the transaction referenced in this document will be
entered into or consummated or that integration will be successful
or synergies will be realized if such transaction were to be
consummated. Business combination proposals, transactions and
integrations are subject to numerous risks and uncertainties.
Although management believes that the expectations reflected in the
forward-looking statements are reasonable, forward-looking
statements are not, and should not be relied upon as a guarantee of
future performance or results, nor will they necessarily prove to
be accurate indications of the times at which such performance or
results will be achieved. The forward-looking statements included
are made only as of the date of the statement. 3D Systems
undertakes no obligation to update or revise any forward-looking
statements made by management or on its behalf, whether as a result
of future developments, subsequent events or circumstances, or
otherwise, except as required by law.
All references to the binding nature of the offer and merger
agreement being proposed by 3D Systems, whether in a press release,
presentation, other document or public statement, are subject to
the contents of the escrow letter that has been delivered to
Stratasys and will be on file publicly with the SEC.
Additional Information
This communication does not constitute an offer to buy or sell
or the solicitation of an offer to sell or buy any securities. This
communication relates to a proposal which 3D Systems has made
for a business combination with Stratasys. In furtherance of this
proposal and subject to future developments, 3D Systems (and, if a
negotiated transaction is agreed, Stratasys) may file one or
more registration statements, proxy statements or other documents
with the SEC. This communication is not a substitute for any proxy
statement, registration statement, prospectus or other
document that 3D Systems and/or Stratasys may
file with the SEC in connection with the proposed
transaction.
Investors and security holders of 3D
Systems and Stratasys are urged to read the proxy
statement(s), registration statement, prospectus and/or other
documents filed with the SEC carefully in their entirety
if and when they become available as they will contain important
information about the proposed transaction. Any definitive proxy
statement(s) or prospectus(es) (if and when available) will be
mailed to stockholders of 3D Systems and/or Stratasys, as
applicable. Investors and security holders will be able to obtain
free copies of these documents (if and when available) and other
documents filed with the SEC by 3D Systems through the
web site maintained by the SEC at http://www.sec.gov.
This document shall not constitute an offer to buy or sell or
the solicitation of an offer to sell or buy any securities, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10
of the U.S. Securities Act of 1933, as amended.
This communication is neither a solicitation of a proxy nor a
substitute for any proxy statement or other filings that may be
made with the SEC. Nonetheless, 3D Systems and its
directors and executive officers and other members of management
and employees may be deemed to be participants in the solicitation
of proxies in respect of the proposed transaction. You can find
information about 3D Systems’ executive officers and
directors in 3D Systems’ definitive proxy statement filed with
the SEC on April 5, 2023. Additional information
regarding the interests of such potential participants will be
included in one or more registration statements, proxy statements
or other documents filed with the SEC if and when they
become available. These documents (if and when available) may be
obtained free of charge from the SEC’s website at
http://www.sec.gov.
Contacts
Investors:
3D Systemsinvestor.relations@3dsystems.com
MacKenzie Partners, Inc.Dan Burch / Bob
Maresedburch@mackenziepartners.com /
bmarese@mackenziepartners.com
U.S. Media:FTI ConsultingPat Tucker / Rachel Chesley / Kyla
MacLennan3DSystems@fticonsulting.com
Israel Media:Gelbart-Kahana Investor RelationsAviram
Uziaviram@gk-biz.com+972-525329103
—————————————————————1 Assumes $1,500mm in incremental equity
value from $100mm of cost synergies capitalized at an illustrative
15x multiple, approximately 44% combined company ownership to
Stratasys shareholders, a total cash payment by 3D Systems to
Stratasys shareholders of approximately $540mm, and additional
illustrative transaction cost assumptions, including payment of the
termination fee to Desktop Metal. Equity values and value uplift
calculated based on 60-day VWAPs for Stratasys and 3D Systems as of
May 24, 2023.2 Based on CY2023E EBITDA guidance and $100mm run-rate
cost synergies.
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