DEFA14A: Nano Dimension to Acquire Desktop Metal in All-Cash Deal Valued Between $4.07 and $5.50 Per Share

Nano Dimension is set to acquire Desktop Metal in an all-cash transaction expected to close in Q4 2024, valuing each share between $4.07 and $5.50.

Summary

• Nano Dimension and Desktop Metal have announced an agreement for Nano Dimension to acquire Desktop Metal in an all-cash transaction.
• The deal values each Desktop Metal share at between $4.07 and $5.50.
• The acquisition is expected to close in Q4 2024.
• Nano Dimension will cover Desktop Metal's transaction expenses, estimated at around $11 million, potentially reducing the share value by $0.44-$0.63.
• Nano Dimension will provide Desktop Metal with a $20 million secured loan facility, which, if needed, would further reduce the purchase price per share by $0.80.
• If all reductions occur, the price per share will be $4.07, with a total consideration of $135 million.
• The combined company aims to consolidate facilities and overhead, while removing redundancies.
• The acquisition requires approval from Desktop Metal shareholders, regulatory approvals, and is subject to certain termination rights.
• Nano Dimension shareholders will not vote on the deal as it is an all-cash transaction.

Sentiment

Score: 7

Explanation: The document presents a positive outlook on the acquisition, emphasizing synergies and future growth potential. However, it also acknowledges integration challenges and risks, resulting in a moderately positive sentiment.

Positives

• The acquisition provides Desktop Metal shareholders with an all-cash offer.
• The combined company is expected to be the best capitalized in the additive manufacturing space.
• Synergies between the companies are expected in technology, materials, and go-to-market strategies.
• The acquisition aims to create a profitable, organic growth public company in the additive manufacturing sector.
• Nano Dimension's strong sales capacity could improve Desktop Metal's go-to-market capabilities.

Negatives

• The purchase price per share is subject to adjustments based on transaction expenses and a potential loan facility.
• The integration of the two companies will involve significant challenges, including consolidating facilities and overhead.
• Desktop Metal has not yet reached profitability, necessitating consolidation to achieve scale.
• The deal is subject to shareholder and regulatory approvals, and certain termination rights, creating uncertainty.

Risks

• The ultimate outcome of the proposed transaction is uncertain, including the possibility of Desktop Metal stockholders rejecting the deal.
• The announcement of the transaction could affect Desktop Metal's ability to operate its business and retain key personnel.
• The timing of the proposed transaction is subject to change.
• The occurrence of any event that could lead to the termination of the proposed transaction.
• The ability to satisfy closing conditions, including necessary stockholder approvals, is not guaranteed.
• The integration of the two companies may not be as smooth or successful as anticipated.

Future Outlook

The combined company aims to be the best capitalized in the additive manufacturing space and pursue further acquisitions to consolidate the market, with a goal of achieving profitable, organic growth.

Management Comments

• Yoav Stern (Nano Dimension CEO) stated that the combined company will have a vision of 'buy and build' rather than 'merge and cut'.
• Ric Fulop (Desktop Metal CEO) noted that Nano Dimension has made smart acquisitions and that there is little overlap in technologies but many complementary assets.
• Yoav Stern wants to convince Desktop Metal shareholders that the sale of their share is a good thing for them.
• Ric Fulop is committed to getting the deal to the finish line and building a profitable, organic growth public company.

Industry Context

The acquisition reflects a broader trend of consolidation in the additive manufacturing industry, driven by the need for companies to achieve scale and profitability. The merger aims to create a stronger competitor in the market.

Comparison to Industry Standards

• The document references Stratasys' previous attempt to merge with Desktop Metal, highlighting the ongoing consolidation efforts in the AM industry.
• Yoav Stern compares the current consolidation trend to that of the computer software industry 20 years ago, citing Apple and Microsoft's acquisitions.
• The document mentions that Nano Dimension had the fastest organic growth of any of the AM companies last year.
• The combined company aims to be the best capitalized in the additive manufacturing space, suggesting a leading position relative to competitors.

Stakeholder Impact

• Desktop Metal shareholders will receive cash for their shares.
• Employees of both companies may be affected by facility consolidation and overhead reduction.
• Customers may benefit from a broader product portfolio and improved go-to-market capabilities.
• The combined company aims to build a profitable, organic growth public company that benefits all stakeholders.

Next Steps

• Desktop Metal shareholders need to approve the transaction.
• Regulatory approvals are required.
• The companies will work on integration planning within SEC limitations.
• The deal is expected to close in Q4 2024.

Key Dates

Keywords

acquisition, Nano Dimension, Desktop Metal, additive manufacturing, merger, consolidation, all-cash transaction