Nano Dimension has made an offer to take over Stratasys.
Stratasys is one of the leading companies in the space, and one of the two “original” manufacturers of 3D printers from the 1980s. Nano Dimension is not as well-known as Stratasys, but is still a large player in the industry, with a valuation somewhat less than Stratasys.
Nano Dimension has recently been undergoing some corporate turmoil, with some investors wishing to access the cash hoard accumulated by the company. However, it nows seems that the Nano Dimension board has chosen a use for that money.
They want to buy Stratasys.
Nano Dimension has sent a formal offer to the Stratasys board of directors to acquire 85.5% of the shares of the company. Nano Dimension just happens to be the largest existing shareholder of Stratasys, with about 14.5% of the shares already under their control. If the transaction goes through, Nano Dimension would own 100% of Stratasys. They could potentially take the company private off the stock exchange with 100% ownership.
However, Stratasys doesn’t own all those shares — public shareholders do. The request is really to gain the acceptance of the Stratasys board to recommend all shareholders take up the offer. That offer, by the way, is for US$18 per share, which is a 36% premium over the current share price of the company stock. That’s a pretty decent benefit for those who decide to sell.
Nano Dimension explained:
“NANO will offer all Stratasys shareholders $18.00 per Stratasys share in cash, reflecting a premium of 36% to the closing trading price as of March 1st, 2023 and a 31% premium to the 60-day VWAP, as of March 1st, 2023; this valuation represents a ~24x multiple based on 2022 adjusted EBITDA of $36.1 million4 and ~21x multiple based on the midpoint of the Company’s 2023 adjusted EBITDA guidance of ~$43 million.”
The intent of this move, according to Nano Dimension, is to combine complementary products to form a stronger offer for customers. They’re also looking for “synergy”, which is corporate code for layoffs of redundant positions. That’s inevitable in a scenario like this. However, Nano Dimension also indicated they are prepared to offer stay packages for Stratasys “current management team” that would be time limited.
Stratasys apparently has a month to respond to the offer, so I am sure there will be some late nights discussing the offer, as well as negotiations.
For Stratasys shareholders it is an interesting decision: in the long term, would they make more money by keeping the company separate, or would a 36% one-time, right-now, gain be sufficient to make them walk out the door?
Currently Stratasys’ valuation is about US$945M, and Nano Dimension wants to buy the remaining shares for US$1.1B.
However, a 36% premium on that valuation would be around US$1300M. Stratasys’s valuation was at that level or higher only last summer. This means that Stratasys shareholders would basically get the same valuation the company had only eight months ago. It is quite likely that many Stratasys shareholders bought in when prices were around that level, and the Nano Dimension offer might be seen as a loss for some.
Is 36% today enough to walk away from Stratasys forever? Would it not be reasonable to believe Stratasys, on its own without Nano Dimension, could recover (or exceed) that value within a year or two?
I think that’s entirely possible given the company’s strong emphasis on large-scale manufacturing. Why would an investor take that offer at this low point in the economic cycle? Wouldn’t you want to wait until markets pick up and the company becomes more valuable? Why not wait until use of additive manufacturing grows and makes Stratasys more valuable?
I have a hard time understanding why this would be a good deal for Stratasys investors, unless they have no confidence in the existing management team. It may be that Nano Dimension may have to up their offer substantially in order to gain support.
It will also be interesting to see how all this affects the valuations of both Stratasys and Nano Dimension. Stay tuned for our weekly valuation report on Sunday.
Via Nano Dimension