Proxy advisor ISS opposes Stratasys, Desktop Metal merger in 3D printing

Stratasys

20/09/2023 21:44

By Svea Herbst-Bayliss
       NEW YORK, Sept 20 (Reuters) - Influential proxy advisory
firm Institutional Shareholder Services recommended 3D printer
manufacturer Stratasys  SSYS.O  shareholders reject plans to buy
Desktop Metal  DM.N , saying another offer "presents a more
convincing route to value creation," in a note seen by Reuters
on Wednesday.
    ISS's recommendation, which tends to carry significant
weight with shareholders, comes only days before the Sept. 28
vote and marks the latest twist in a years-long drama over how
the 3D printing industry may be consolidated.
    "It is not clear that it (the all-stock offer Stratasys made
for Desktop Metal) creates value for 3D printer manufacturer
Stratasys shareholders," ISS wrote in its note to clients with a
headline "vote against acquisition at SSYS meeting."
    Representatives for Stratasys did not immediately respond to
a request for comment.
    Instead, ISS wrote that a bid from 3D Systems  DDD.N  to buy
Stratasys, which was disclosed last week and is the latest in a
series of overtures to buy the company that now plans to buy
someone else, would offer more value to shareholders.
    Desktop Metal made its all-stock deal proposal on May 25,
valuing its equity at approximately $591 million in aggregate.
    The deal would generate about $50 million in revenue
synergies plus $50 million in annual cost savings by 2025, the
Stratasys board has argued. The directors felt this deal was
more attractive than others, including overtures from 3D Systems
and Nano Dimension.
    But as Stratasys', Desktop Metal's and 3D Systems' share
prices have dropped in the last 52 weeks, ISS argued that 3D
Systems' cash and stock offer for Stratasys "holds out an
important hedge against further declines."
    3D Systems offered to pay $7 in cash and 1.6387 3D shares
per Stratasys share, which would leave them owning 46% of the
combined company. Stratasys last week rejected the offer and
said it was terminating discussions with 3D.
    Stratasys investor Nano Dimension, which owns 14.1% of the
company, said last week that it would vote against the merger.
    

 (Reporting by Svea Herbst-Bayliss; Editing by Josie Kao)
 ((svea.herbst@thomsonreuters.com; +617 233 2138; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))