8-K: Desktop Metal Issues Tax Guidance for Nano Dimension Merger

Desktop Metal has released tax guidelines for stockholders regarding the upcoming merger with Nano Dimension, focusing on Israeli withholding tax requirements.

Summary

• Desktop Metal has provided a letter to its stockholders outlining the necessary documentation to avoid Israeli withholding tax on the merger consideration from the planned merger with Nano Dimension.
• The merger is expected to close in the fourth quarter of 2024, subject to customary closing conditions and regulatory approvals.
• Israeli tax law requires non-residents to provide specific documents to avoid a 25% withholding tax on merger payments.
• Stockholders must submit these documents to Computershare, the Exchange Agent, or their broker after the merger closes to receive their payment.
• The required documents vary depending on whether the stockholder is a registered holder or a street name holder, the percentage of stock owned, and the amount of merger consideration received.
• Documents may include a Tax Declaration, a Tax Residency Certificate, a Valid Tax Certificate from the Israeli Tax Authority, and a copy of a passport.
• The Exchange Agent intends to accept Tax Residency Certificates issued in 2024 for payments through June 30, 2025.
• The process to obtain a Valid Tax Certificate from the Israeli Tax Authority typically takes two to four weeks.
• US residents can obtain a Tax Residency Certificate from the IRS by submitting IRS Form 8802, which may take at least 45 days to process and costs $85 for individuals and $185 for entities.

Sentiment

Score: 7

Explanation: The document is informative and provides necessary guidance for stockholders, but the complexity of the tax requirements and the potential for delays in receiving merger consideration slightly lowers the sentiment.

Positives

• The company is proactively providing guidance to stockholders to help them avoid Israeli withholding tax.
• The Exchange Agent is allowing flexibility with the acceptance of 2024 Tax Residency Certificates.
• The document provides clear instructions and contact information for stockholders to seek assistance.

Negatives

• Stockholders must take action and provide documentation to avoid the 25% withholding tax.
• Obtaining the necessary tax documents, especially from the Israeli Tax Authority or the IRS, can be time-consuming and may cause delays in receiving merger consideration.
• The process for obtaining a Valid Tax Certificate from the Israeli Tax Authority can take two to four weeks.
• The process for obtaining a Tax Residency Certificate from the IRS can take at least 45 days and costs $85 for individuals and $185 for entities.

Risks

• Failure to provide the required documentation will result in a 25% Israeli withholding tax on the merger consideration.
• Delays in obtaining the necessary tax documents could delay the receipt of merger consideration.
• The merger is subject to customary closing conditions and regulatory approvals, which could potentially delay or prevent the merger from closing.
• There are risks associated with the proposed transaction, including the ultimate outcome, timing, and potential termination.

Future Outlook

The merger is expected to close in the fourth quarter of 2024, subject to customary closing conditions and regulatory approvals. Stockholders will need to provide the required tax documentation after the closing to receive their merger consideration without Israeli withholding tax.

Management Comments

• The company is providing information to stockholders regarding documentation required for Israeli withholding tax in connection with the anticipated closing of the Merger.

Industry Context

This announcement is specific to the merger between Desktop Metal and Nano Dimension. It highlights the complexities of cross-border transactions and the need for companies to provide clear guidance to stockholders regarding tax implications.

Comparison to Industry Standards

• The requirement for tax documentation in cross-border mergers is standard practice.
• The specific requirements for Israeli withholding tax are unique to this transaction and the involvement of an Israeli company.
• The process of obtaining tax residency certificates from the IRS is a common procedure for US residents involved in international transactions.
• The timeline for obtaining a Valid Tax Certificate from the Israeli Tax Authority (2-4 weeks) is typical for such processes.
• The timeline for obtaining a Tax Residency Certificate from the IRS (at least 45 days) is also typical for such processes.

Stakeholder Impact

• Stockholders are directly impacted by the tax requirements and need to take action to avoid withholding tax.
• The merger will impact the ownership structure of Desktop Metal.
• The merger will impact the financial position of Desktop Metal.

Next Steps

• Stockholders should review the provided tax guidelines and consult with their tax advisors.
• Stockholders should gather the necessary documentation, including a Tax Declaration, Tax Residency Certificate, or Valid Tax Certificate.
• Stockholders should wait for instructions from the Exchange Agent or their broker after the merger closes on how to submit the required documents.
• US residents should apply for an IRS Form 6166 if required.

Key Dates

Keywords

merger, tax, withholding tax, Israeli Tax Authority, Nano Dimension, Desktop Metal, stockholders, tax residency certificate, tax declaration, exchange agent