Institutional Shareholder Services (ISS), an influential proxy advisory firm, has recommended that shareholders of 3D printer manufacturer Stratasys reject plans to buy Desktop Metal, stating that another offer “presents a more convincing route to value creation,” according to a note seen by Reuters. ISS’s recommendation carries significant weight with shareholders and comes just days before the scheduled vote on September 28th, adding another twist to the ongoing drama over the consolidation of the 3D printing industry.
ISS wrote in its note to clients titled “vote against acquisition at SSYS meeting” that it is unclear if the all-stock offer made by Stratasys for Desktop Metal creates value for Stratasys shareholders. Representatives for Stratasys have not yet responded to requests for comment. Rather than the offer from Stratasys, ISS believes that a bid from 3D Systems to acquire Stratasys, revealed last week and part of a series of overtures to buy the company that now plans to acquire someone else, would offer greater value to shareholders.
Last May, Desktop Metal proposed an all-stock deal, valuing its equity at approximately $591 million in total. The Stratasys board argued that the deal would generate about $50 million in revenue synergies and $50 million in annual cost savings by 2025, making it more attractive than other offers, including those from 3D Systems and Nano Dimension. However, as the share prices of Stratasys, Desktop Metal, and 3D Systems have all dropped over the past 52 weeks, ISS contends that 3D System’s cash and stock offer for Stratasys would provide a hedge against further declines.
In 3D System’s offer, they proposed to pay $7 in cash and 1.6387 3D shares per Stratasys share, resulting in them owning 46% of the combined company. Stratasys rejected the offer last week and announced the termination of discussions with 3D. Nano Dimension, a Stratasys investor holding a 14.1% stake in the company, also stated that they would vote against the merger.
As the vote approaches, shareholders will closely consider ISS’s recommendation and the potential value that can be unlocked in the consolidation of the 3D printing industry.
Reporting by Svea Herbst-Bayliss; Editing by Josie Kao
Credit: The Star : Tech Feed
