3D Systems has announced a target date of August 4, 2023 for completion of due diligence and merger agreement discussions with Stratasys. This would mark the culmination of efforts that began with the July 17, 2023 announcement from the Stratasys Board that the latest acquisition offer from 3D Systems would “reasonably be expected” to result in a superior proposal to the merger agreement with Desktop Metal.
3D Systems says that with the conclusion of the efforts on August 4, it expects that Stratasys would be in a position to terminate the agreement with Desktop Metal, that 3D Systems would pay the termination fee that Stratasys would owe to Desktop Metal, and that Stratasys and 3D Systems would execute a merger agreement.
3D Systems also confirmed that its July 13 offer is its “best and final proposal”. The offer stated that each Stratasys share will convert into 7.50 USD in cash and 1.5444 shares of the combined company, equating to approximately 44% of the shares in addition to the approximately 540 million USD in cash.
3D Systems also says that it remains “poised and eager” to resolve any comments that Stratasys may have on terms, other than the form and amount of merger consideration, set forth in the July 13 merger agreement that 3D Systems publicly filed with the SEC.
Since July 17, the two management teams and their respective advisors have exchanged due diligence materials and held multiple meetings to discuss synergies, internal projections and otherwise confirm the “attractiveness” of a combination. Based on the exchanges and meetings, which 3D Systems says remains ongoing, it has increased its initial projections and is confident that it will be able to deliver “highly achievable” cost synergies of at least 110 million USD, compared to prior estimates of 100 million USD.
Stratasys, meanwhile, says it is still waiting for detailed cost synergy analysis from 3D Systems, and cannot properly review the offer until it is received all requested due diligence information.
3D Systems says that its merger agreement submitted on July 13 tracks the Desktop Metal merger agreement and contains a number of provisions for the benefit of Stratasys shareholders that are absent from the Desktop Metal merger agreement. According to 3D Systems the provisions were designed to improve certainty of closing and enhance Stratasys’ ability to maximise value for shareholders, including a provision for the Stratasys Board to terminate the merger agreement to accept a superior proposal.
3D Systems adds that as was detailed in the registration statement on Form F-4 that Stratasys filed with the SEC, Stratasys completed its due diligence review of Desktop Metal in 14 days, and in parallel, completed negotiation of the merger agreement with Desktop Metal in seven days.
Dr. Jeffrey Graves, President and CEO of 3D Systems said: “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 is now 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. 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.”