Donerail reiterates intent to vote against Stratasys-Desktop Metal deal

The Donerail Group LP, a large shareholder of Stratasys (SSYS), issued an open letter to Stratasys’ Board of Directors. In its letter, Donerail discusses its serious concerns with the proposed acquisition of Desktop Metal, Inc. (DM) by Stratasys and highlights the recommendation by leading proxy advisory firm Institutional Shareholder Services Inc. that Stratasys shareholders vote AGAINST the proposed acquisition of Desktop Metal. “In conjunction with our skepticism regarding a DM acquisition, we have extensively detailed our concerns regarding historical actions undertaken by the Board,” the letter reads. “Notwithstanding the DM acquisition – a transaction that we intend to vote AGAINST given the multitude of clear value-creating options that do exist – our concern regarding the Board’s ability to be appropriate fiduciaries for shareholders has risen to alarming levels. Yesterday, a leading proxy advisory firm, ISS, agreed with our assessment regarding a DM acquisition, publishing a report in which it explicitly recommended that ‘shareholders should vote against the proposed transaction with DM,’ detailing that ‘it is not clear that (the proposed DM transaction) creates value for SSYS shareholders.’ Other large shareholders have also publicly announced that they intend to vote AGAINST the proposed DM transaction. But, perhaps, in what spotlights what we believe to be grave and fundamental issues, ISS questioned critical matters that, we believe, speak to the Board’s inability to act as fiduciaries and properly oversee Stratasys management. In the part of its report in which ISS assesses the SSYS criticism of the competency of the 3D Systems Corporation (DDD) management team in the context of a DDD merger proposal, ISS detailed that ‘such concern appears to be primarily about the role that particular SSYS management members would play following a (DDD merger), and less about formulating a path to create value for its shareholders in a transaction.’ Given these comments from ISS, how are shareholders to ever trust this Board’s ability to oversee Stratasys management?”