DEFA14A: Desktop Metal Addresses Stockholder Lawsuits with Supplemental Disclosures Amid Nano Dimension Merger

Desktop Metal supplements its proxy statement to address stockholder lawsuits related to its merger with Nano Dimension, while denying any wrongdoing or the need for additional disclosures.

Summary

• Desktop Metal has filed a supplement to its definitive proxy statement related to the proposed merger with Nano Dimension Ltd.
• This action comes in response to demand letters and lawsuits from purported Desktop Metal stockholders alleging material omissions and misrepresentations in the proxy statement.
• The company denies any liability or wrongdoing but is providing supplemental disclosures to moot the claims and avoid the costs and uncertainties of litigation.
• The supplemental disclosures include amendments to the background of the merger, the opinion of Desktop Metal's financial advisor (Stifel), and unaudited financial forecasts.
• Specifically, the background of the merger section is updated with details on discussions with other parties and the severance letters of Desktop Metal executives.
• The Stifel opinion section is amended with additional details on the selected public companies and transactions analyses, including financial multiples and implied share prices.
• The unaudited financial forecasts section is updated with a summary of GAAP and non-GAAP financial forecasts for 2024-2028.
• The company believes that no further disclosure is required under applicable laws and that the supplemental disclosures are immaterial.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the company is addressing stockholder concerns and providing additional disclosures, it is also facing lawsuits and uncertainties related to the merger. The financial forecasts show potential for improvement, but near-term losses remain a concern.

Positives

• Desktop Metal is proactively addressing stockholder concerns by providing supplemental disclosures.
• The company is aiming to minimize the risk, costs, burden, nuisance, and uncertainties inherent in litigation.
• The supplemental disclosures provide additional details on the background of the merger, the Stifel opinion, and unaudited financial forecasts.
• The financial forecasts project significant revenue growth and margin improvement over the next five years.
• Adjusted EBITDA is projected to turn positive by 2027.

Negatives

• The need for supplemental disclosures indicates potential concerns about the initial proxy statement.
• Stockholder lawsuits and demand letters suggest dissatisfaction with the merger or its disclosures.
• The company is incurring costs associated with addressing the lawsuits and preparing the supplemental disclosures.
• The financial forecasts indicate significant net losses in the near term, although they are projected to improve.

Risks

• The ultimate outcome of the proposed transaction between Desktop Metal and Nano is uncertain.
• Desktop Metal's stockholders may reject the proposed transaction.
• Reductions in the per-share merger consideration may occur based on transaction expenses and potential borrowings.
• The announcement of the proposed transaction may negatively affect Desktop Metal's ability to operate its business and retain key personnel.
• The timing of the proposed transaction is uncertain.
• The occurrence of any event, change, or other circumstance could lead to the termination of the proposed transaction.
• The ability to satisfy closing conditions to the completion of the proposed transaction is not guaranteed.

Future Outlook

Desktop Metal's management has provided financial forecasts for 2024-2028, projecting significant revenue growth, margin improvement, and a transition to positive Adjusted EBITDA. However, these forecasts are subject to various risks and uncertainties.

Management Comments

• The Company believes that no further disclosure is required to supplement the Definitive Proxy Statement under applicable laws.
• The Company vigorously denies all allegations in the Demand Letters and the Complaints, including that any additional disclosure was or is required, and believes that the supplemental disclosures contained herein are immaterial.

Industry Context

The merger between Desktop Metal and Nano Dimension reflects a trend of consolidation in the additive manufacturing industry. Companies are seeking to expand their capabilities, market reach, and technological expertise through strategic acquisitions and mergers.

Comparison to Industry Standards

• Stifel's selected public companies analysis included additive manufacturing companies such as Kornit Digital Ltd., 3D Systems Corporation, Velo3D, Inc., Markforged Holding Corporation, Prodways Group SA, and Stratasys Ltd.
• The analysis compared enterprise value to revenue multiples for these companies, providing a benchmark for Desktop Metal's valuation.
• The selected transactions analysis included acquisitions in technology and tech-adjacent businesses, such as ZeroFox Holdings, Fathom Digital Manufacturing, and Fitbit, offering insights into valuation trends in similar industries.
• The multiples observed in these transactions provide a reference point for evaluating the fairness of the merger consideration.

Legal Proceedings

• Desktop Metal has received demand letters from purported stockholders alleging material omissions and misrepresentations in the proxy statement.
• A purported stockholder filed a complaint in the United States District Court for the Southern District of New York, captioned Bugantev v. Desktop Metal, Inc., which was later voluntarily dismissed.
• A purported stockholder of Desktop Metal filed a complaint in the Supreme Court of the State of New York, County of New York, captioned Floyd v. Desktop Metal, et al.
• A purported stockholder of Desktop Metal filed a complaint in the Supreme Court of the State of New York, County of New York, captioned Clark v. Desktop Metal, et al.

Stakeholder Impact

• The merger could impact Desktop Metal's shareholders, employees, customers, and suppliers.
• Shareholders will receive consideration in the merger, subject to potential adjustments.
• Employees may experience changes in their roles and responsibilities following the merger.
• Customers and suppliers may be affected by the integration of Desktop Metal and Nano Dimension's operations.

Next Steps

• Desktop Metal's stockholders will vote on the proposed merger at a special meeting scheduled for October 2, 2024.
• The company will continue to defend itself against the stockholder lawsuits.
• Desktop Metal and Nano Dimension will work to satisfy the closing conditions to complete the merger.

Key Dates

Keywords

Merger, Nano Dimension, Proxy Statement, Stockholder Lawsuits, Supplemental Disclosures, Financial Forecasts, Stifel, Desktop Metal