Donerail Group urges Stratasys board to terminate Desktop Metal deal

The Donerail Group, a large shareholder of Stratasys (SSYS), with a beneficial ownership interest of approximately 2.3% of the Company’s outstanding shares, released a letter to Stratasys’ Board of Directors, which read in part, “Most specifically, we have concerns regarding the Board’s clear, unconscionable, and continued refusal to engage with bona fide suitors regarding a sale of the Company over the past two years. Such fiduciary negligence needs to be rectified immediately. As the Company disclosed in a June 20th regulatory filing, since January of 2021, Stratasys has been on the receiving end of at least 12 unsolicited acquisition proposals from at least 3 separate bona fide acquirers. We also believe that the Board would receive additional acquisition interest if it would indicate a willingness to seriously entertain it. Implied acquisition premiums of the disclosed 12 unsolicited acquisition proposals have been attractive, with one proposal exceeding over 60% from the trading price at the time of the offer. In 11 of those 12 unsolicited acquisition proposals, Stratasys rejected the unsolicited proposal without engagement. Such blind and inconceivable rejections have cost Stratasys shareholders dearly. In the one unsolicited acquisition offer that was made of which the Board did, in fact, engage upon – the March 2023 Desktop Metal Incorporated (DM) proposal – the premium offered was the lowest of all other unsolicited offers and subsequently ended not in a sale of SSYS, but rather, what has turned into a highly risky bet-the-company merger for Stratasys…Tuesday morning, we watched with great interest as two separate, attractive, unsolicited offers were presented to Stratasys shareholders – one of which objectively serves as a highly attractive alternative for SSYS shareholders to the Desktop Metal proposed transaction. In fact, we believed that the prior 3D Systems Corporation’s (DDD) offer – and their likely ability to increase their bid – was sufficiently compelling to warrant engagement with them vis-a-vis the Desktop Metal proposed transaction’s value offered and precisely the valuation work that we had endeavored to highlight to the Board in a meeting – a request that was, again, rejected. As it stands today, 3D Systems’ revised, increased proposal offers SSYS shareholders a combination with a highly complementary strategic party in a cash and stock deal valuing Stratasys at an over 27% premium to Monday’s closing trading price. We do not believe that the Board can reject the obvious any longer: a 3D Systems transaction is significantly more compelling than the current alternatives and warrants immediate engagement…In this instance, we encourage the Board to follow its commitment to “work for shareholders” and terminate the Desktop Metal deal in favor of a more attractive deal.”