3D Systems (NYSE:DDD) (“the Company”) responded to today’s
announcement by Stratasys Ltd. (NASDAQ: SSYS) (“Stratasys”) that
Stratasys continues to refuse to engage with the Company to discuss
a business combination transaction despite the opportunity to
create superior value for Stratasys shareholders. On June 27, 2023,
the Company submitted an enhanced proposal to combine with
Stratasys in a transaction that would reward Stratasys shareholders
with a package of stock and cash consideration, representing a
market value of $20.84 per Stratasys share as of the close of
trading yesterday.
President and CEO Dr. Jeffrey Graves stated, “The Stratasys
Board has made the perplexing decision to not engage with us to
reach a mutually agreed upon, friendly transaction that we believe
would unlock value for all shareholders. Frankly, we are surprised
that in their quick rejection, Stratasys’ Board did not acknowledge
or refute the merits of our proposed transaction, or respond to the
market’s concerns about the value destruction of the Desktop Metal
merger.”
Continued Dr. Graves, “We are hearing from a spectrum of
Stratasys shareholders that they understand and believe that a
combination between 3D Systems and Stratasys offers an unparalleled
option for certainty, scale and long-term growth. This feedback
from Stratasys’ own shareholders only strengthens our conviction
that this is the right deal at the right time. It is concerning
that, as public company directors, the Stratasys Board is ignoring
these signals from its investors. It is difficult to understand
their rationale, which we think raises questions as to whether they
have entrenched themselves in a position that demonstrates an
absence of focus on maximizing shareholder value.”
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 ~$150 million in pro forma
cash on the combined company balance sheet with a combined ~12%
EBITDA margin1, 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.
3D Systems continues to believe Stratasys is relying on
assumptions that are unfounded and unreasonable in order to proceed
with the proposed merger with Desktop Metal. These assumptions
include:
- A Sudden and Significant Shift in Projected Desktop
Metal Performance: Stratasys management’s EBITDA
projections for Desktop Metal unrealistically assume sudden and
meteoric growth and the realization of speculative revenue
synergies by Desktop Metal, a company that has not delivered on its
growth prospects or any of its financial commitments since its
de-SPAC “IPO” in 2020.
- Turnaround of a 28-year-old Metals Technology:
Stratasys continues to tout Desktop Metal’s binder jet technology
as the future of mass-produced additively manufactured metal
products, but after nearly three decades, all players focused on
binder jet metals have only amassed a 4% share of the total market,
largely due to inferior technology. Binder jet technology continues
to face significant challenges to demonstrate its viability,
achieve scale for mass production and generate a profit.
- Unrealistic Cost Synergy Assumptions:
Stratasys has stated the Desktop Metal transaction will result in
$50 million of cost synergies. The Company does not believe that is
achievable. This $50 million is incremental to the $100 million of
standalone cost reductions previously announced by Desktop Metal,
which equates to 60% of Desktop Metal’s 2022 operating
expenses.
- Highly Speculative Revenue Synergies:
Stratasys cites significant value creation potential through the
realization of speculative revenue synergies from manufacturing and
mass production. The Company believes investors should be skeptical
of such revenue synergies as they are hard to establish and
forecast until actually achieved.
- Highly Speculative and Unsupported Multiple
Re-rating: To support its rejection of the 3D Systems
proposal, Stratasys published a valuation analysis that predicated
65% of the potential uplift from the proposed Desktop Metal merger
on a multiple re-rating that 3D Systems believes is highly
speculative and unsupported.
- An Inferior Financial Profile: The Company’s
analysis shows that the combination with Desktop Metal will create
a combined company with lower pro forma revenue, lower gross
profit, negative EBITDA margin and negative free cash flow. 3D
Systems believes Desktop Metal’s historical track record of
operating losses, impairments and cash burn will introduce
significant risk to Stratasys’ financial profile in the coming
years.
Dr. Graves concluded, “We have shown a willingness to negotiate
with the Stratasys Board and remain flexible and open to engaging
in productive discourse in pursuit of a friendly, negotiated
transaction. We are committed to making this combination a
reality.”
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.
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.
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 Based on CY2023E EBITDA guidance and $100mm run-rate cost
synergies.
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