3D Systems enters battle for control of Stratasys with $25-per-share cash-and-stock offer

Rock Hill, S.C.-based 3D Systems
DDD,
-0.97%
said its cash-and-stock offer of $7.50 in cash and 1.2507 in newly issued shares is equal to about $25 per Stratasys
SSYS,
+1.23%
share. Upon completion, Stratasys shareholders would own 40% of the combined company and receive about $540 million in cash.

Based on a set of assumptions including about $100 million in run-rate cost synergies, 3D Systems said the combined company would deliver value of more than $1.84 billion, about $740 million in excess of the company’s fully diluted market cap using a 60-day volume-weighted average price as of May 24 — the last trading day prior to Stratasys’ announcement of its proposal to acquire Desktop Metal
DM,
+2.46%.

That’s about a 70% “value uplift,” according to 3D Systems, which delivered the proposal to the Stratasys board on May 30.

That same day, the Stratasys board unanimously rejected an $18-a-share partial tender offer from Nano Dimension Ltd., saying the offer “substantially undervalues Stratasys.”

For more: Stratasys board rejects latest Nano Dimension offer and urges shareholders to join it

The two 3-D printing companies have been locked in battle since Israel-based Nano Dimension
NNDM,
-1.64%
launched an all-cash bid for Stratasys on March 9 and disclosed that it was Stratasys’ largest shareholder, with about 14.5% of outstanding shares.

The board rejected that offer as well as a sweetened one at $20.05 a share, and instead unveiled the Desktop Metal deal, which was valued at $1.8 billion. Just moments after announcing that plan, Nano Dimension came forward with its partial tender at the original $18 a share, seeking to boost its stake in Minneapolis-based Stratasys to 53%-55%.

On Friday, 3D Systems said a combination with Stratasys would offer a great range of additive technologies and an enhanced ability to invest in innovation. The industry is expected to grow at a compound annual growth rate of about 21% over the next five to seven years.

The combined entity would have revenue in calendar year 2024 of an estimated $1.3 billion, making it the biggest pure-play 3-D player. The deal would offer immediate cash and liquid stock value without any financing condition and is unlikely to face regulatory hurdles.

“We are at an inflection point in our industry, and we see significant upside for our shareholders and all stakeholders by capturing the benefits of scale, enhancing investment in innovation and delivering long-term profitable growth,” said Jeffrey Graves, 3D Systems’ president and CEO.

Stratasys’ stock jumped 10% premarket. 3D Systems’ stock was up 1.6%.