Stratasys likely to reject 3D Systems takeover offer - analyst
Grafner/iStock via Getty Images
Stratasys (NASDAQ:SSYS) is likely to reject 3D Systems (NYSE:DDD) ~$18 a share cash and stock takeover offer, according to a Credit Suisse analyst.
Given that the Stratasys (SSYS) board turned down a $20.05 per share offer from Nano Dimension (NASDAQ:NNDM) in April, Stratasys would likely also reject the 3D Systems (DDD) bid. Credit Suisse analyst Shannon Cross wrote in a note on Thursday.
Stratasys (SSYS) on Thursday said its board plans to "carefully" review the offer.
"We believe it will similarly conclude that 3D Systems’ offer undervalues the company," Cross, who has an outperform rating and a $20 price target on Stratasys (SSYS), wrote.
3D Systems (DDD) is offering $7.50 in cash and 1.2507 newly issued shares of 3D Systems common stock and claims that its offer will include $100 million of cost synergies, which can deliver a value of about $25 per Stratasys (SSYS) share.
"We think cost synergies would be limited to elimination of duplicative costs, and 3D Systems would likely leverage Stratasys’ higher profitability to increase investment in its bio-printing efforts," Cross wrote. "We see minimal opportunity for scaling benefit (which is a key point of the SSYS DM combination) given the businesses are of similar size and manufacturing operations are not centralized for either."
The 3D Systems (DDD) offer for Stratasys (SSYS) also complicates the situation after Stratasys last Thursday agreed to acquire Desktop Metal (NYSE:DM) in a $1.8 billion all-stock deal. The bid also follows Nano Dimension's (NNDM) $18 per share partial tender offer for Stratasys, which SSYS rejected on Tuesday.
"While we have previously laid out reasons as to why we do not support a takeover by Nano Dimension, we do not believe the DM acquisition has been well-received (mainly due to EBITDA losses and cash burn), adding more risk that shareholders will tender their shares for $18 cash," Cross added.
The Stratasys (SSYS) rejection of the Nano Dimension (NNDM) partial tender follows several previous rejections of NNDM offers. It also follows that Nano Dimension (NNDM) has been battling with a dissident shareholder, Murchinson, over board seats.
Murchinson in March said it received "overwhelming support" for the removal of three directors and chairman at a shareholder vote, a vote that Nano Dimension (NNDM) called "illegal" and "invalid."