What are the implications of Stratasys’ extraordinary meeting?

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Stratasys Sets the Stage: An Extraordinary Meeting of Shareholders

Stratasys has caught the attention of the industry with the announcement of an “Extraordinary Meeting” of shareholders scheduled for September 28th. While it may sound dramatic, let’s delve into the details to understand what this means.

To comprehend the significance of this meeting, it’s important to grasp the inner workings of a company. Shareholders typically have one opportunity per year to directly engage with the company at the “Annual General Meeting” (AGM). During the AGM, crucial proposals such as the election of the board of directors are voted upon. Following this, the elected board of directors meets regularly to evaluate the company’s operations and collaborate with the CEO. Their main responsibility is to recruit and hire the CEO. Shareholders’ involvement is limited to voting for board members once a year, unless an additional “Annual General Meeting” is called. This legally termed “Extraordinary Meeting” is rare and convened when there are pressing matters that may impact the structure of the company, particularly the board of directors.

And that’s exactly what’s happening in the case of Stratasys. Earlier this year, Stratasys management struck a merger deal with Desktop Metal management. This merger would result in the creation of the largest publicly traded 3D printing company globally. However, a crucial part of the agreement stipulates the formation of a new and diverse board of directors. This new board would comprise equal shares of both Desktop Metal and Stratasys representatives, along with the CEO of the merged entity. Since company management cannot unilaterally execute this, it is up to the shareholders to decide who should serve on the board. Hence, Stratasys has called the extraordinary meeting to seek approval from its shareholders for this crucial arrangement.

The proposals up for voting at the extraordinary meeting encompass the reconfiguration of the board of directors, as well as the stock movements between the two companies, which will facilitate the merger. This may seem “extraordinary”, but it is a routine step mandated by the agreement. It is highly probable that Stratasys shareholders will give their consent to the deal, thus making the transaction proceed smoothly. So far, this aligns with expectations, but there’s more to the story.

After the merger announcement, Stratasys became a prime target for takeover bids. Nano Dimension and 3D Systems, the largest company in the industry at that time, made offers to acquire Stratasys. Interestingly, amidst these bids, Stratasys’ valuation surpassed that of its potential acquirer, 3D Systems. While the Nano Dimension proposals were rejected, Stratasys and 3D Systems revealed ongoing negotiations behind the scenes for a possible deal. Although no concrete details have been announced yet, it is evident that both companies are engaged in discussions.

3D Systems’ proposal included requesting Stratasys to abandon the Desktop Metal merger, inevitably triggering a penalty fee for Stratasys. Furthermore, 3D Systems was prepared to pay that “break-up” fee to secure only Stratasys as the acquisition target. Despite being obligated to proceed with the Desktop Metal merger, Stratasys anticipates a yet-to-be-announced proposal from 3D Systems.

The potential outcomes of this unfolding situation are enthralling. One possibility is that Stratasys may prolong negotiations with 3D Systems just long enough to complete the merger with Desktop Metal. This would result in Stratasys becoming a significantly larger entity, potentially causing 3D Systems to pay a premium to acquire Stratasys. Alternatively, Stratasys could leverage the enhanced scale from the Desktop Metal merger to acquire 3D Systems. The possibilities are truly boundless.

In conclusion, Stratasys has set the stage with its extraordinary meeting. This move reflects the vital role shareholders play in shaping company decisions. While the proposed merger with Desktop Metal is proceeding as planned, the ongoing negotiations between Stratasys and 3D Systems add an element of intrigue to the situation. All eyes are on Stratasys as stakeholders eagerly await the outcome of this high-stakes chess match.

Via Stratasys

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