Stratasys is investigating various strategic options to navigate the landscape after the merger.

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The Stratasys takeover/merger saga has taken an interesting twist. Last Thursday, a special shareholder vote was held to determine whether shareholders approved of the company’s proposal to merge with Desktop Metal. However, on Friday, Stratasys announced that a preliminary count of votes indicated that the merger proposal had not been accepted.

It appears that a significant number of Stratasys shareholders were against the merger. This is not surprising, considering that Nano Dimension, a rival company that had previously attempted a takeover, publicly stated that they were voting against the merger. Additionally, several analyst firms recommended against the merger. It is also worth noting that 3D Systems, another company that had made takeover bids for Stratasys in the past, may have influenced some shareholders’ decisions.

While a 3D Systems–Stratasys partnership might provide short-term gains, the long-term outcomes could be different. Still, shareholders often prioritize short-term benefits, and this may be the case here. The question now is what happens next?

3D Systems had made a “final” offer to Stratasys before the vote, which was binding and required Stratasys to agree. The offer is set to expire this week. However, I believe that Stratasys will not accept the offer. The offer was not significantly different from previous ones, and 3D Systems’ valuation has been declining. This diminishes the appeal of the deal for Stratasys.

In response to the failed merger with Desktop Metal, Stratasys has initiated a process to explore other strategic alternatives. One possibility is that they will pursue smaller companies to expand their portfolio of products and services. This could increase their value and put them in a better position for future negotiations with 3D Systems or other potential suitors.

As for Desktop Metal, they will receive the breakup fee specified in the merger agreement with Stratasys. While this is positive for them, it remains unclear what their next move will be. They have expressed their focus on improving non-GAAP gross margins, operating expenses, adjusted EBITDA, and operating cash flow, aiming for adjusted Q4 EBITDA profitability. It is unclear if they have an alternative plan at this point.

Overall, the saga continues, and it will be interesting to see how the situation unfolds. Stratasys is back to square one, exploring different options for mergers and acquisitions. 3D Systems has given them a 60-day window to explore alternatives, but it seems unlikely that Stratasys will accept the offer on the table. Only time will tell what the future holds for all parties involved.

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