Merger Creates a Next-Generation Additive
Manufacturing Company Delivering Industrial Polymer, Metal, Sand
and Ceramic Solutions from Design to Mass Production
Combined Company Expected to Generate $1.1
Billion in Revenue with Adjusted EBITDA Margin of 10%-12% in
2025
Stratasys and Desktop Metal Reaffirm Previously
Provided Guidance
Companies to Host Conference Call to Discuss
Transaction Today at 8:30 A.M. ET
Visit www.NextGenerationAM.com for More
Information
Stratasys Ltd. (Nasdaq: SSYS) (“Stratasys”) and Desktop Metal,
Inc. (NYSE: DM) (“Desktop Metal”) today announced that they have
entered into a definitive agreement whereby the companies will
combine in an all-stock transaction valued at approximately $1.8
billion. The transaction unites the polymer strengths of Stratasys
with the complementary industrial mass production leadership of
Desktop Metal’s brands, creating an additive manufacturing company
that is expected to be well-positioned to serve the evolving needs
of customers in manufacturing.
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Stratasys and Desktop Metal are expected to generate $1.1
billion in 2025 revenue, with significant upside potential in a
total addressable market of more than $100 billion by 2032.
Under the terms of the agreement, which has been unanimously
approved by the Boards of Directors of both companies, Desktop
Metal stockholders will receive 0.123 ordinary shares of Stratasys
for each share of Desktop Metal Class A common stock. This
represents a value of approximately $1.88 per share of Desktop
Metal Class A common stock based on the closing price of a
Stratasys ordinary share of $15.26 on May 23, 2023. Following the
closing of the transaction, which is expected to occur in the
fourth quarter of 2023, existing Stratasys shareholders will own
approximately 59% of the combined company, and legacy Desktop Metal
stockholders will own approximately 41% of the combined company, in
each case, on a fully diluted basis.
“Today is an important day in Stratasys’ evolution,” said Dr.
Yoav Zeif, CEO of Stratasys. “The combination with Desktop Metal
will accelerate our growth trajectory by uniting two leaders to
create a premier global provider of industrial additive
manufacturing solutions. With attractive positions across
complementary product offerings, including aerospace, automotive,
consumer products, healthcare and dental, as well as one of the
largest and most experienced R&D teams, industry-leading
go-to-market infrastructure and a robust balance sheet, the
combined company will be committed to delivering ongoing innovation
while providing outstanding service to customers. We look forward
to building on the complementary strengths of the combined business
and leveraging the strong brand equity across the portfolio to
deliver enhanced value to shareholders, customers and
employees.”
“We believe this is a landmark moment for the additive
manufacturing industry,” said Ric Fulop, Co-founder, Chairman and
CEO of Desktop Metal. “The combination of these two great companies
marks a turning point in driving the next phase of additive
manufacturing for mass production. We are excited to complement our
portfolio of production metal, sand, ceramic and dental 3D printing
solutions with Stratasys’ polymer offerings. Together, we will
strive to build an even more resilient offering with a diversified
customer base across industries and applications in order to drive
long-term sustainable growth. We look forward to combining with
Stratasys to deliver profitability while driving further innovation
for a larger customer base and providing expanded opportunities for
our employees.”
Compelling Strategic and Financial Benefits of the
Transaction
- Combined Company Creates Greater Opportunities for
Growth: The transaction establishes a uniquely scaled additive
manufacturing company that is expected to be one of the largest
companies in the industry, targeting $1.1 billion in 2025 revenue.
In addition, there are significant opportunities as additive
manufacturing increases its offerings in mass production, with
expected industry growth to more than $100 billion by 2032.
- Brings Together Complementary Portfolios: Bringing
together Stratasys’ and Desktop Metal’s additive manufacturing
platform offerings, the combined company will have a broad product
portfolio and attractive positions across multiple additive
manufacturing technologies and solutions. Upon close, more than 50%
of pro forma combined company revenue is expected to be derived
from end-use-parts manufacturing and mass production, one of the
fastest growing segments in additive manufacturing. The combined
company is expected to offer customers end to end solutions from
designing, prototyping and tooling to mass production and
aftermarket operations across the entire manufacturing
lifecycle.
- Unites Robust Innovation and Technology Expertise: The
transaction brings together complementary IP portfolios with more
than 3,400 patents and pending patent applications. Together,
Stratasys and Desktop Metal have invested over $500 million in
R&D over the last four fiscal years. In addition, the combined
company will have one of the largest R&D and engineering teams
in the industry with over 800 scientists and engineers focused on
driving innovation across a differentiated materials library.
- Diversifies Customer Base Across Industries and
Applications: This combination brings together complementary
products and technologies that cover a wide range of industry
verticals and use cases. The combined company is expected to have
superior global go-to-market capabilities with enhanced market
access for recognizable brands, backed up by premier customer
support capabilities. With more than 27,000 industrial customers,
the combined company will have a large customer base across
industries, materials and applications to drive significant
recurring revenue from consumables.
- Creates Opportunities for Meaningful Synergies: The
combined company is expected to generate approximately $50 million
in additional annual run-rate cost synergies by 2025, due primarily
to cost reductions in sales, general and administrative expenses,
supply chain management and optimization of operational processes.
The combined company is expected to generate an additional $50
million in annual run-rate revenue synergies by 2025 from enhanced
market access.1
- Increases Financial Strength: The combined company is
targeting 10%-12% adjusted EBITDA margins in 2025. Together,
Stratasys and Desktop Metal had $437 million2 of cash and cash
equivalents as of the first quarter of 2023, and this transaction
accelerates the combined company’s financial flexibility through a
well-capitalized balance sheet to drive future growth.
Leadership and Governance
Following the close of the transaction, Dr. Zeif will lead the
combined company as Chief Executive Officer together with Mr. Fulop
as Chairman of the Board. Upon completion of the transaction, the
combined company’s Board of Directors will be comprised of 11
members, five of whom will be selected by Stratasys, and five of
whom will be selected by Desktop Metal, plus Dr. Zeif as CEO.
Stratasys Chairman Dov Ofer will serve as lead independent director
of the combined company.
Timing to Close and Approvals
The transaction, which is expected to be completed in the fourth
quarter of 2023, is subject to customary closing conditions,
including the approval of Stratasys’ shareholders and Desktop
Metal’s stockholders and the receipt of certain governmental and
regulatory approvals.
Shareholder Rights Plans
In connection with the transaction, Stratasys entered into an
amendment to its existing shareholder rights plan (as amended, the
“Stratasys Rights Plan”), pursuant to which the expiration date has
been extended to the later of (a) July 24, 2023 and (b) the
conclusion of the extraordinary general meeting of Stratasys’
shareholders for the purpose of seeking approval of Stratasys’
shareholders of the transactions contemplated by the merger
agreement (unless such meeting has been validly adjourned or
postponed, in which case at the final adjournment or postponement
thereof) or such time as the merger agreement has been terminated
in accordance with its terms. The extension of the expiration date
of the Stratasys Rights Plan is intended to ensure that all
shareholders have a meaningful opportunity to vote on the approval
of the transaction and preserve for all shareholders the long-term
value of the company in the event of a takeover or acquisition of a
controlling stake without the payment of a control premium. The
Stratasys Rights Plan will not prevent any person from making a
superior proposal pursuant to the terms of the merger
agreement.
Also in connection with the transaction, the Desktop Metal board
intends to adopt a limited duration shareholder rights plan (the
“Desktop Metal Rights Plan”). The Desktop Metal Rights Plan will be
designed to assist the Desktop Metal board in maximizing
shareholder value in connection with the transaction. The Desktop
Metal Rights Plan, like the Stratasys Rights Plan, will not prevent
any person from making a superior proposal pursuant to the terms of
the merger agreement.
Additional details about the amendment to the Stratasys Rights
Plan will be included in a Form 6-K to be filed by Stratasys with
the SEC. Additional details about the Desktop Metal Rights Plan
will be included in a Current Report on Form 8-K to be filed by
Desktop Metal with the U.S. Securities and Exchange Commission (the
“SEC”).
Stratasys and Desktop Metal Guidance
Stratasys today reaffirmed the guidance provided on May 16, 2023
when the company reported its first quarter earnings results,
including its medium-term financial forecast. Desktop Metal also
reaffirmed full year 2023 guidance provided with its first quarter
earnings results on May 10, 2023.
Conference Call and Webcast
Stratasys and Desktop Metal will host a joint conference call
and webcast today at 8:30 A.M. ET to discuss the details of the
transaction.
The companies have posted a presentation regarding the
transaction on the Investor Relations sections of their
websites.
The investor conference call will be available via live webcast
on Stratasys’ investor relations website at investors.stratasys.com
and on Desktop Metal’s investor relations website at
ir.desktopmetal.com, or directly at the following web address:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=TAE4tFjn.
To participate by telephone, the U.S. toll-free number is
877-524-8416 and the international dial-in is +1 412-902-1028.
Investors are advised to dial into the call at least ten minutes
prior to the call to register. The webcast will be available for
six months at investors.stratasys.com and ir.desktopmetal.com, or
by accessing the above-provided web address.
Stratasys and Desktop Metal have also launched a website,
www.NextGenerationAM.com, where the presentation and other
materials related to the transaction are available.
Advisors
J.P. Morgan Securities LLC is acting as exclusive financial
advisor to Stratasys and Meitar Law Offices and Wachtell, Lipton,
Rosen & Katz are serving as legal counsel. Stifel is acting as
exclusive financial advisor to Desktop Metal and Latham &
Watkins LLP and Shibolet & Co. are serving as legal
counsel.
About Stratasys
Stratasys is leading the global shift to additive manufacturing
with innovative 3D printing solutions for industries such as
aerospace, automotive, consumer products, healthcare, fashion and
education. Through smart and connected 3D printers, polymer
materials, a software ecosystem, and parts on demand, Stratasys
solutions deliver competitive advantages at every stage in the
product value chain. The world’s leading organizations turn to
Stratasys to transform product design, bring agility to
manufacturing and supply chains, and improve patient care.
To learn more about Stratasys, visit www.stratasys.com, the
Stratasys blog, Twitter, LinkedIn, or Facebook. Stratasys reserves
the right to utilize any of the foregoing social media platforms,
including the Company’s websites, to share material, non-public
information pursuant to the SEC’s Regulation FD. To the extent
necessary and mandated by applicable law, Stratasys will also
include such information in its public disclosure filings.
Stratasys is a registered trademark and the Stratasys signet is
a trademark of Stratasys Ltd. and/or its subsidiaries or
affiliates. All other trademarks are the property of their
respective owners.
About Desktop Metal
Desktop Metal (NYSE:DM) is driving Additive Manufacturing 2.0, a
new era of on-demand, digital mass production of industrial,
medical, and consumer products. Our innovative 3D printers,
materials, and software deliver the speed, cost, and part quality
required for this transformation. We’re the original inventors and
world leaders of the 3D printing methods we believe will empower
this shift, binder jetting and digital light processing. Today, our
systems print metal, polymer, sand and other ceramics, as well as
foam and recycled wood. Manufacturers use our technology worldwide
to save time and money, reduce waste, increase flexibility, and
produce designs that solve the world’s toughest problems and enable
once-impossible innovations. Learn more about Desktop Metal and our
#TeamDM brands at www.desktopmetal.com.
Forward-Looking Statements
This communication contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995.
Such forward-looking statements include statements relating to
the proposed transaction between Stratasys Ltd. (“Stratasys”) and
Desktop Metal, Inc. (“Desktop Metal”), including statements
regarding the benefits of the transaction and the anticipated
timing of the transaction, and information regarding the businesses
of Stratasys and Desktop Metal, including expectations regarding
outlook and all underlying assumptions, Stratasys’ and Desktop
Metal’s objectives, plans and strategies, information relating to
operating trends in markets where Stratasys and Desktop Metal
operate, statements that contain projections of results of
operations or of financial condition and all other statements other
than statements of historical fact that address activities, events
or developments that Stratasys or Desktop Metal intends, expects,
projects, believes or anticipates will or may occur in the future.
Such statements are based on management’s beliefs and assumptions
made based on information currently available to management. All
statements in this communication, other than statements of
historical fact, are forward-looking statements that may be
identified by the use of the words “outlook,” “guidance,”
“expects,” “believes,” “anticipates,” “should,” “estimates,” and
similar expressions. These forward-looking statements involve known
and unknown risks and uncertainties, which may cause Stratasys’ or
Desktop Metal’s actual results and performance to be materially
different from those expressed or implied in the forward-looking
statements. Factors and risks that may impact future results and
performance include, but are not limited to those factors and risks
described in Item 3.D “Key Information - Risk Factors”, Item 4
“Information on the Company”, and Item 5 “Operating and Financial
Review and Prospects” in Stratasys’ Annual Report on Form 20-F for
the year ended December 31, 2022 and Part 1, Item 1A, “Risk
Factors” in Desktop Metal’s Annual Report on Form 10-K for the year
ended December 31, 2022, each filed with the Securities and
Exchange Commission (the “SEC”), and in other filings by Stratasys
and Desktop Metal with the SEC. These include, but are not limited
to: the ultimate outcome of the proposed transaction between
Stratasys and Desktop Metal, including the possibility that
Stratasys or Desktop Metal shareholders will reject the proposed
transaction; the effect of the announcement of the proposed
transaction on the ability of Stratasys and Desktop Metal to
operate their respective businesses and retain and hire key
personnel and to maintain favorable business relationships; the
timing of the proposed transaction; the occurrence of any event,
change or other circumstance that could give rise to the
termination of the proposed transaction; the ability to satisfy
closing conditions to the completion of the proposed transaction
(including any necessary shareholder approvals); other risks
related to the completion of the proposed transaction and actions
related thereto; changes in demand for Stratasys’ or Desktop
Metal’s products and services; global market, political and
economic conditions, and in the countries in which Stratasys and
Desktop Metal operate in particular; government regulations and
approvals; the extent of growth of the 3D printing market
generally; the global macro-economic environment, including
headwinds caused by inflation, rising interest rates, unfavorable
currency exchange rates and potential recessionary conditions; the
impact of shifts in prices or margins of the products that
Stratasys or Desktop Metal sells or services Stratasys or Desktop
Metal provides, including due to a shift towards lower margin
products or services; the potential adverse impact that recent
global interruptions and delays involving freight carriers and
other third parties may have on Stratasys’ or Desktop Metal’s
supply chain and distribution network and consequently, Stratasys’
or Desktop Metal’s ability to successfully sell both existing and
newly-launched 3D printing products; litigation and regulatory
proceedings, including any proceedings that may be instituted
against Stratasys or Desktop Metal related to the proposed
transaction; impacts of rapid technological change in the additive
manufacturing industry, which requires Stratasys and Desktop Metal
to continue to develop new products and innovations to meet
constantly evolving customer demands and which could adversely
affect market adoption of Stratasys’ or Desktop Metal’s products;
and disruptions of Stratasys’ or Desktop Metal’s information
technology systems.
These risks, as well as other risks related to the proposed
transaction, will be included in the registration statement on Form
F-4 and joint proxy statement/prospectus that will be filed with
the Securities and Exchange Commission (“SEC”) in connection with
the proposed transaction. While the list of factors presented here
is, and the list of factors to be presented in the registration
statement on Form F-4 are, considered representative, no such list
should be considered to be a complete statement of all potential
risks and uncertainties. For additional information about other
factors that could cause actual results to differ materially from
those described in the forward-looking statements, please refer to
Stratasys’ and Desktop Metal’s respective periodic reports and
other filings with the SEC, including the risk factors identified
in Stratasys’ and Desktop Metal’s Annual Reports on Form 20-F and
Form 10-K, respectively, and Stratasys’ Form 6-K reports that
published its results for the quarter ended March 31, 2023, which
it furnished to the SEC on May 16, 2023, and Desktop Metal’s most
recent Quarterly Reports on Form 10-Q. The forward-looking
statements included in this communication are made only as of the
date hereof. Neither Stratasys nor Desktop Metal undertakes any
obligation to update any forward-looking statements to reflect
subsequent events or circumstances, except as required by law.
No Offer or Solicitation
This communication is not intended to and shall not constitute
an offer to buy or sell or the solicitation of an offer to buy or
sell any securities, or a solicitation of any vote or approval, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made, except by
means of a prospectus meeting the requirements of Section 10 of the
U.S. Securities Act of 1933, as amended.
Additional Information about the Transaction and Where to
Find It
In connection with the proposed transaction, Stratasys intends
to file with the SEC a registration statement on Form F-4 that will
include a joint proxy statement of Stratasys and Desktop Metal and
that also constitutes a prospectus of Stratasys. Each of Stratasys
and Desktop Metal may also file other relevant documents with the
SEC regarding the proposed transaction. This document is not a
substitute for the joint proxy statement/prospectus or registration
statement or any other document that Stratasys or Desktop Metal may
file with the SEC. The definitive joint proxy statement/prospectus
(if and when available) will be mailed to shareholders of Stratasys
and Desktop Metal. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ
THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS
AND ANY OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC, AS
WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY
AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE
THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTION. Investors and security holders will be able
to obtain free copies of the registration statement and joint proxy
statement/prospectus (if and when available) and other documents
containing important information about Stratasys, Desktop Metal and
the proposed transaction, once such documents are filed with the
SEC through the website maintained by the SEC at
http://www.sec.gov. Copies of the documents filed with, or
furnished, to the SEC by Stratasys will be available free of charge
on Stratasys’ website at
https://investors.stratasys.com/sec-filings. Copies of the
documents filed with the SEC by Desktop Metal will be available
free of charge on Desktop Metal’s website at
https://ir.desktopmetal.com/sec-filings/all-sec-filings.
Participants in the Solicitation
Stratasys, Desktop Metal and certain of their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies in respect of the proposed
transaction. Information about the directors and executive officers
of Stratasys, including a description of their direct or indirect
interests, by security holdings or otherwise, is set forth in
Stratasys’ proxy statement for its 2022 Annual General Meeting of
Shareholders, which was filed with the SEC on August 8, 2022, and
Stratasys’ Annual Report on Form 20-F for the fiscal year ended
December 31, 2022, which was filed with the SEC on March 3, 2023.
Information about the directors and executive officers of Desktop
Metal, including a description of their direct or indirect
interests, by security holdings or otherwise, is set forth in
Desktop Metal’s proxy statement for its 2023 Annual Meeting of
Stockholders, which was filed with the SEC on April 25, 2023 and
Desktop Metal’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2022, which was filed with the SEC on March 1,
2023. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the joint proxy statement/prospectus and other relevant materials
to be filed with the SEC regarding the proposed transaction when
such materials become available. Investors should read the joint
proxy statement/prospectus carefully when it becomes available
before making any voting or investment decisions. You may obtain
free copies of these documents from Stratasys or Desktop Metal
using the sources indicated above.
______________________________ 1 Based on management estimates.
Run-rate synergies expected to be realized by CY 2025E. 2 Before
executing the Covestro acquisition.
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Stratasys Investor Relations Yonah Lloyd CCO / VP
Investor Relations Yonah.Lloyd@stratasys.com
U.S. Media Ed Trissel / Joseph Sala / Kara Brickman Joele Frank,
Wilkinson Brimmer Katcher (212) 355-4449
Israel Media Rosa Coblens VP Sustainability, Public Relations IL
& Global Internal Communications Rosa.Coblens@stratasys.com
Yael Arnon Scherf Communications yaela@scherfcom.com
+972527202703
Desktop Metal Investor Relations Jay Gentzkow
jaygentzkow@desktopmetal.com (781) 730-2110
Media Relations Sarah Webster sarahwebster@desktopmetal.com
(313) 715-6988
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