Stratasys (SSYS) Gets Revised Takeover Proposal Once More
Stratasys SSYS once again received a revised takeover proposal from the Israel-based 3D printed electronics systems and additive manufacturing company, Nano Dimension. This time, the firm has raised its offer at $20.05 per share in cash, which reflects an acquisition premium of about 22.4% to the target company’s yesterday’s closing price of $16.38 per share.
The latest offer came just after the Stratasys Board unanimously rejected the revised unsolicited proposal received from Nano Dimension on Mar 29, 2023 to acquire the company for $19.55 per share in cash.
Nano Dimension intends to initiate a special tender offer directly to the SSYS shareholders in case the Stratasys board does not respond to the latest proposal by Apr 16. Nano has declared this as its "best and final" offer to the Stratasys board of directors.
On Mar 22, the company’s board had unanimously rejected Nano’s unsolicited non-binding indicative proposal to acquire Stratasys for $18.00 per share in cash. After careful evaluation, SSYS board stated that the proposal substantially undervalued Stratasys and was not in the best interests of Stratasys and its shareholders.
Stratasys, Ltd. Price and Consensus
Stratasys, Ltd. price-consensus-chart | Stratasys, Ltd. Quote
Before that, on Mar 9, Reuters had reported about the Israel-based company’s takeover bid value of around $1.1 billion. The global news and financial data provider revealed that Nano Dimension, the largest shareholder of Stratasys, owns approximately 14.5% of outstanding shares of the company at present. In July 2022, Nano Dimension had acquired 12.12% of SSYS’ outstanding shares and through the latest deal, it intends to buy remaining stake of the Eden Prairie, MN-headquartered firm.
The buyout would strengthen Nano Dimension’s 3D printing business creating a market leader with unparalleled portfolio of materials, software and deep learning with a go-to-market strength in the form of sales channels. Moreover, the acquisition would give Nano access to Stratasys’ wide range of premium polymer-based 3D printing systems, material and consumables, fused deposition modeling and PolyJet AM machines portfolio which would help it fortify its manufacturing capabilities and overall productivity.
The acquisition would also boost Nano Dimension’s research and development capabilities, enhance opportunities of market penetration, new customer engagement, cross-selling and lead synergies saving costs for the company.
What Makes Stratasys a Takeover Target?
Stratasys has been scaling newer heights across all its business segments. It has been benefiting from an increase in demand for 3D-printed materials and its focus on product launches and strategic partnership agreements or acquisitions.
Over the past few quarters, the company has inked strategic partnerships with the likes of Schneider Electric, The Boeing Co., Ford Motor Co., Siemens, Boom Supersonic and United Launch Alliance to fuel its growth momentum. Such collaborations help introduce advanced 3D printing technologies to the aerospace and automotive industries while expanding Stratasys’ geographic reach and driving its market penetration.
Besides, the company has launched several innovative products that position it well over the long term. Stratasys’ machines facilitate prototyping within a few hours which reduces development time and upfront costs. The company’s spool-based system compares favorably with UV polymer systems. Its RedEye RPM is the world's largest RP and part-building service. RedEye RPM is an online extension of the company’s BuildFDM service. This product has grown rapidly over the past several years and has offered good business for the company.
Last week, Stratasys received an order from Götz Maschinenbau, a German service bureau, for four of its high-speed H350 3D printers. This will turn Götz’s total fleet size to six systems, making it the leading user of Selective Absorption Fusion technology among service bureaus in European, Middle Eastern and African markets.
In February, Stratasys signed an agreement with Ricoh USA, Inc. to provide on-demand 3D-printed anatomic models for clinical settings. Earlier in the same month, it launched a first-ever monolithic, full-color 3D printed permanent dentures solution, TrueDent, specifically designed for the fabrication of dental appliances, including removable dentures and temporaries. This transformative solution for the dental industry not only simplifies the denture manufacturing process but also lowers the costs, allowing for dentures and temporaries to be produced much faster, achieving incredible aesthetics.
Last year, Stratasys enhanced its dental solution portfolio with the launch of Origin One Dental 3D printer, which provides comprehensive additive manufacturing solutions to the dental industry. In the same year, it launched a new cybersecurity solution for additive manufacturing named ProtectAM and unveiled J5 MediJet, a compact medical 3D printer that integrates multiple applications into one system, enabling the creation of intricate 3D anatomical models.
Attractive Valuations Make SSYS Acquisition Target
Currently, several technology sector stocks are trading way below the 52-week high and at attractive valuation despite strong fundamentals. In our opinion, Stratasys is among the most beaten-down stocks in the technology space. At yesterday’s closing price, shares of SSYS are trading 35.9% lower than its 52-week high of $25.56 attained on Apr 4, 2022.
Moreover, the stock currently trades at a forward 12-month price-to-sales multiple of 1.64, significantly lower than the five-year high of 5.51 as well as the Zacks Computer-Peripheral Equipment industry’s average of 0.72.
The strength of Stratasys’ fundamentals and solid prospects along with attractive valuations is likely to have made the Israel-based additive manufacturing firm consider the acquisition.
Zacks Rank & Key Picks
Stratasys currently carries a Zacks Rank #2 (Buy). Shares of SSYS have plunged 32.1% in the past year.
Some top-ranked stocks from the broader Computer and Technology sector are Airbnb ABNB, Baidu BIDU and Fabrinet FN. While Fabrinet sports a Zacks Rank #1 (Strong Buy), Airbnb and Baidu carry a Zacks Rank #2 at present. You can see the complete list of today's Zacks #1 Rank stocks here.
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ABNB's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 57.2%. Shares of the company have declined 29% in the past year.
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