What are the possible outcomes of the ongoing struggle for Stratasys?
Fabbaloo readers will be familiar with this story: Stratasys has been receiving a series of increasing bids to take over their company, all while at the same time negotiating a merger with Desktop Metal. That merger was agreed to, but before it closes one of either Nano Dimension or 3D Systems might purchase Stratasys.
We’ve been covering the story as it develops, and there seems to be new information emerging every day or so. This week, for example, 3D Systems raised their bid to counteract Nano Dimension’s bid.
Meanwhile, Stratasys rejects these offers and prefers the Desktop Metal merger. It may be that they’re playing coy and simply waiting for the bids to get sufficiently high to agree to one of them.
But what could be the outcome of all these corporate moves? What are the likely scenarios, and what would it mean for 3D printing?
There are the five possible scenarios:
This is the least likely outcome, as there has been considerable interest that almost certainly will eventually get to a financial level where shareholders will move one way or another. This is also highly unlikely to happen since Stratasys is committed to at least the merger with Desktop Metal.
Nano Dimension Wins
Nano Dimension is sitting on a rather large US$1B cash hoard, and they have chosen to deploy it as payment for Stratasys shares. While their initial strategy was to purchase all of the shares, and presumably take Stratasys to a private company off the market, that won’t happen.
The bidding values rose so much that Nano Dimension can no longer purchase all of the Stratasys shares they don’t already own. They therefore have shifted to merely purchase sufficient shares to gain more than 50% of the company, and therefore take control.
This seems like an unlikely outcome, and not just because of Nano Dimension’s questionable approach and management history. As we reported earlier, this bid would effectively put Stratasys under complete control of a single person, Nano Dimension CEO Yoav Stern. Lack of truly independent and experienced board members is an incredibly bad management practice that could lead to trouble in the future.
Combining Nano Dimension’s technology with Stratasys’ would result in something less than either with Desktop Metal or especially 3D Systems, and this will be noticed by shareholders. In addition, 3D Systems is much larger and could beat any bid by Nano Dimension.
Desktop Metal Merger Only
This outcome seems possible, but only if Stratasys shareholders truly believe that a merger with Desktop Metal would result in better returns than going with 3D Systems. I’m not sure that’s the case, but it may be simply a matter of bids reaching the right level to trigger action.
A merger with Desktop Metal would certainly be beneficial, as the two companies have many complementary 3D printing processes under their portfolios. This would lead to a unified company that could provide broad coverage for many industries.
3D Systems Wins
The most likely outcome in my opinion could be that 3D Systems eventually produces a bid that is sufficiently high to attract the majority of Stratasys shareholders. That level might have been already reached, if not for the persistent bid raises by Nano Dimension. That company’s presence in the process will certainly drive prices much higher.
If 3D Systems takes over, that will create by far the largest 3D print company on the planet, with a value many times the second place company. The combined entity would have the largest sales and distribution networks by far, even with the consolidation that would inevitably occur.
The number of 3D print technologies in the combined profile would be very significant, and the financial resources would permit the new 3D Systems to plunge more deeply into many markets.
3D Systems Wins and Continues the Desktop Metal Merger
There’s one more possibility, and that is if the Desktop Metal merger does complete and then 3D Systems takes over. It may be that by the time 3D Systems’ bid price is sufficiently raised, Stratasys could by then have completed the DM merger. It’s also possible that a combined Stratasys-3D Systems might want to complete the Desktop Metal merger anyway.
If so, then the resulting 3D Systems would be even larger than as described above. The resulting company would have all kinds of 3D print technologies in its portfolio, along with a considerable amount of materials.
One of these five outcomes is going to happen, likely by the end of the year, if not much sooner. Which one do you think will happen?