On July 27, 2023, 3D Systems, Rock Hill, South Carolina, USA, announced that it had set a target completion date of August 4, 2023 for the due diligence and merger agreement discussions with Stratasys, Minneapolis, Minnesota. These efforts started with Stratasys’ Board announcing on July 17, 2023, that 3D Systems’ binding offer from July 13, 2023, would likely result in a ‘Superior Proposal’ as defined in Stratasys’ merger agreement with Desktop Metal, Burlington, Massachusetts.
With the conclusion of these efforts by Stratasys and 3D Systems on or about August 4, 3D Systems reportedly expects that Stratasys would be in a position to agree to terminate their agreement with Desktop Metal. In this case, 3D Systems would pay the termination fee that Stratasys owed to Desktop Metal, and Stratasys and 3D Systems would execute a merger agreement.
3D Systems also confirmed that the form and amount of merger offered on July 13 of each Stratasys share converted 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 shares of the combined company, in addition to the approximately $540 million of aggregate cash consideration being offered, is its best and final proposal.
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Since July 17, the two management teams and their respective advisors have reportedly exchanged due diligence materials and held multiple meetings to discuss synergies, internal projections and otherwise confirm the attractiveness of a combination. Based on these exchanges and meetings, which remain ongoing, 3D Systems has now increased its initial projections and is said to be confident that it will be able to deliver highly achievable cost synergies of at least $110 million, compared to its prior estimates of $100 million.
Dr Jeffrey Graves, president and CEO of 3D Systems, commented, “We are pleased that through these initial discussions, we have been able to increase our estimated cost synergies. The value of this combination is clear and our binding proposal represents a significant premium to Stratasys shareholders. Our job now is to move quickly to realise that value. It is now two weeks ago that the Stratasys Board determined that our binding offer is reasonably likely to result in a superior alternative to the Desktop Metal merger.”
“We are fully committed to engaging with Stratasys to complete the reciprocal due diligence processes,” he continued. “In addition, we stand ready to hammer out a definitive agreement reflecting the form and amount of merger consideration that served as the basis for the Stratasys Board determination two weeks ago. We believe that we can complete these processes in another eight days at most, and have set August 4 as a target date.”
Stratasys released a statement on July 28 in response to 3D Systems’ press release stating that it has moved expeditiously to provide the data requested by 3D Systems for review, as well as having already conducted management meetings. However, Stratasys’ statement claims that it has repeatedly requested that 3D Systems reciprocate with the same information for their company, as well as its assessment of potential negative revenue synergies and is still awaiting this information.
Stratasys also noted that 3D Systems added that its public proposal from July 13, 2023, is its ‘best and final proposal’ for the first time, and that the Stratasys Board will evaluate any and all proposals holistically, taking into account the necessary due diligence and analysis, including regulatory analysis. However, it did state that the path forward lies with cooperation and transparency.
Stratasys concluded by sharing that the Stratasys Board expects to be in a position to make a determination as to whether the July 13, 2023 proposal, or any further revised and improved proposal, made by 3D Systems, represents a Superior Proposal, as defined in the merger agreement with Desktop Metal once 3D Systems provides the requested due diligence information.