The board of directors of Stratasys has unanimously agreed to engage in merger talks with competitor 3D Systems after a third unsolicited offer from the South Carolina-based company.
Stratasys, the 3-D printer manufacturer based in Eden Prairie and Rehovot, Israel, has received multiple deal offers since March. This includes a tender offer from Nano Dimension, also based in Israel, seeking majority control of Stratasys shares. The cash and stock merger offer from Rock Hill, S.C.-based 3D Systems came after that.
Both are offers of more than $1 billion. But some Stratasys stockholders have pushed for the company to negotiate with suitors, especially 3D.
The Stratasys board consulted with outside financial consultants and legal advisers to determine they would engage further with 3D Systems in what could result in a superior merger proposal, according to a news release Monday.
On May 25, Stratasys announced its own deal to acquire Massachusetts-based Desktop Metal. The board of Stratasys is still unanimous in its support for a Desktop Metal acquisition but is now willing to engage in further discussions with 3D Systems.
The board of directors at Stratasys will continue to do more due diligence to determine if 3D Systems offer constitutes a "Superior Proposal."
Last week Nano Dimension and 3D Systems both raised their offers after the Stratasys board rejected initial and revised offers from each.
"We are pleased with the Stratasys board's determination," said Dr. Jeffrey Graves, president and chief executive of 3D Systems in a press release. "We anticipate prompt termination of the Desktop Metal merger agreement and countersignature of the agreement to combine 3D Systems and Stratasys so that we can deliver our collective stakeholders the unparalleled benefits of the envisioned combined company."
In 3D Systems' latest offer, it would pay $7.50 per share in cash and raise the equity to newly issued shares of 3D Systems common stock per ordinary share of Stratasys. 3D Systems said the implied value of its new offer, including proposed cost synergies, is worth about $2 billion.
In addition, the company said it would cover the multimillion-dollar termination fee Stratasys would owe Desktop Metal if Stratasys were to walk away from that proposal.
While the Stratasys board has agreed to engage in talks with 3D Systems, it also offered its strongest rebuttal yet of the Nano Dimension partial tender offer in another press release issued Monday.
Stratasys again urged shareholders not to tender their shares for the revised Nano Dimension offer. In the release Stratasys said the Nano offer significantly undervalues Stratasys and that Nano CEO Yoav Stern "cannot be trusted" and "is not qualified to manage Stratasys."
Stratasys did note in its press release Monday that while it has agreed to further discussions with 3D Systems, a company that it had multiple discussions with in the past, there is no assurance its latest offer will result in a final transaction.
One analyst who covers the 3D printing industry believes all the attention could bring more bidders to the table for Stratasys.
Greg Palm, an analyst with Craig-Hallum Capital Group, believes Stratasys wants to remain independent or a stand-alone subsidiary of a larger company.
"While the door is open for some level of engagement [with 3D Systems], we're not sure if this ends up being the final price or even final deal," Palm wrote in an investor note Monday morning. "Investors should brace themselves for additional, unexpected news."
All the attention in Stratasys has increased its share price, it rose more than 17% last week. Shares closed at $20.85 on Monday, rising another 2.4%.
