Stratasys and Objet Agree to Combine to Create a Leader in 3D Printing and Direct Digital Manufacturing
Combined Company Would Be Valued at Approximately $1.4 Billion
Combined Company Well Positioned With Multiple Technology
Platforms and Complementary Products Available Across Enhanced
Integrated Sales and Marketing Organization
Transaction Expected to be Accretive to Cash Earnings Per Share
Within First 12 Months After Closing
Stratasys Announces Preliminary First Quarter 2012 Financial
Results
MINNEAPOLIS & REHOVOT, Israel--(BUSINESS WIRE)--
Stratasys, Inc. (NASDAQ:SSYS), a leading manufacturer of 3D printers and
production systems for prototyping and manufacturing applications, and
privately held Objet Ltd., a leading manufacturer of 3D printers for
rapid prototyping, today announced that the boards of directors of both
companies have unanimously approved a definitive merger agreement under
which the companies would combine in an all-stock transaction with a
combined equity value of approximately $1.4 billion, based upon the
closing price of Stratasys' common stock on April 13, 2012. The
transaction will position the combined company as a leader within the
high-growth 3D printing and direct digital manufacturing industry.
Under the terms of the agreement, Stratasys will merge with a subsidiary
of Objet, and Stratasys shareholders will receive one share of the new
combined company for each share of Stratasys common stock they own. Upon
closing of the transaction, Stratasys shareholders are expected to own
55 percent and Objet shareholders are expected to own 45 percent of the
combined company on a fully diluted basis using the treasury stock
method.
The combined company, which will retain the Stratasys name and operate
under the name Stratasys Ltd., will have dual headquarters in Eden
Prairie, Minnesota and Rehovot, Israel, the locations of Stratasys' and
Objet's current headquarters, respectively, and will be registered in
Israel. The company will continue to trade on NASDAQ under the ticker
SSYS. Scott Crump, co-founder, current chief executive officer and
chairman of Stratasys, will become full-time chairman of the combined
company. Upon completion of the transaction, the combined company will
also form an executive committee comprised of four members of the board
of directors whose duties will include overseeing the integration of
Stratasys and Objet and implementing the combined company's business
strategy. Elchanan Jaglom, current chairman of Objet, will serve as
chairman of the executive committee of the combined company.
David Reis, current chief executive officer of Objet, will become chief
executive officer of the combined company. Following the closing of the
transaction, the board of directors of the combined company will consist
of nine directors, with four directors designated by Stratasys and four
directors designated by Objet. One additional director will be
designated by Stratasys and approved by Objet.
The merger of Stratasys and Objet is expected to create a world class
company offering an impressive portfolio of 3D printing and direct
digital manufacturing solutions. The combined company should be well
positioned to provide customers with the right solution by offering
systems that produce parts with a wide range of capabilities and
materials. The combined marketing and sales capabilities will provide
extensive geographic reach, which should help grow customer awareness of
the many opportunities to employ 3D printing and rapid prototyping
techniques. Existing customers will benefit from a broader range of
products that offer complementary functionality, which will create
opportunities to cross-sell the product lines into the combined
company's installed base. In addition, the combined company expects to
expand its access to new customers across multiple industries. With a
significant increase in scale, the new Stratasys will seek to grow
efficiently and faster through its combined organization.
"Today marks a significant milestone for Stratasys and an important
development for the 3D printing and direct digital manufacturing
industry," said Scott Crump, chief executive officer and chairman of
Stratasys. "We are bringing together two of the most innovative and
respected players in the field to create a global leader in a
high-growth industry. Together we will have a broader and more
comprehensive product and technology portfolio, and the resources, team
and financial strength to achieve our goals. Building on the success of
both companies, I am confident that we will capitalize on the many
opportunities this combination creates for our shareholders, channel
partners, customers, employees and other important stakeholders. We look
forward to completing this transaction and to building significant
long-term value for our shareholders."
"We are excited to be joining forces with Stratasys," said David Reis,
chief executive officer of Objet. "This transaction creates an
organization that will provide a broad range of rapid prototyping and
direct digital manufacturing applications to our customers, and the
ability to bring exciting new products to the market. With an impressive
technology portfolio, great talent, and an extensive sales and marketing
channel, we will be well positioned to achieve efficient growth, expand
our distribution reach and create value for all of our stakeholders. We
look forward to working with Stratasys employees to take our combined
company to the next level."
Strategic and Financial Benefits of Transaction
-
Impressive Product Portfolio: With an expansive product and
technology portfolio, the combined company will offer customers the
right solutions for a broad range of applications within a wide range
of industry verticals. The combined company will offer complementary
products and materials and bring together Objet's expertise in design
verification and visualization with Stratasys' leadership in
functional testing and direct digital manufacturing. The combined
company will offer Stratasys' advanced FDM® Technology, ideal for
functional prototypes and applications requiring high levels of
durability, Stratasys' Solidscape® technology, used to make complex
wax patterns for the investment casting process of finished parts, and
Objet's PolyJet™ technology, which provides high resolution printing
suited for rapid prototyping and applications that require high
feature detail and a finer surface finish.
-
Expanded Sales and Marketing Reach: The combined sales and
marketing organization will include more than 260 resellers and
selling agent entities around the world, allowing customers to
streamline purchasing processes and provide new access to solutions
that address their needs. In addition, this combination will result in
greater distribution reach and enhanced opportunities for cross
selling into the combined company's installed base. The combined
company will also offer improved customer service by joining two
experienced teams capable of servicing a combined product line and
technology portfolio.
-
Enhanced Capabilities and Scale: The merger will yield an even
more impressive research and development team that includes a world
class team of engineers and product developers. The combined company
will be well positioned to remain at the forefront of innovation
within a dynamic industry that is poised to transform the process of
new product design and manufacturing. Together, Stratasys and Objet
will have more capabilities to develop new consumables and systems
than either Stratasys or Objet could alone. In addition, the combined
company's competitive position is expected to be improved by a scaled
organization with a more comprehensive reach.
-
Strong Leadership and Management Team: Scott Crump, co-founder,
current CEO and chairman of Stratasys, together with Elchanan Jaglom,
the current chairman of Objet, were the visionaries behind combining
the two companies. Upon completion of the transaction, Scott Crump and
Elchanan Jaglom will continue to jointly provide visionary leadership
for the combined company. Scott Crump will become full-time chairman
of the combined company, leading innovation. Elchanan Jaglom will
serve as chairman of the executive committee of the combined company.
David Reis, current Objet CEO, will become CEO of the combined
company, bringing proven executive leadership skills that will be
critical in guiding the company toward future growth. David Reis has
been CEO of Objet since 2009 and a member of the Objet board of
directors since 2003. Prior to becoming CEO of Objet, he spent several
years in the wide-format 2D printing industry as CEO and president at
NUR Macroprinters and Scitex Vision.
-
Strengthened Financial Performance: The transaction is expected
to be accretive to cash earnings per share within the first 12 months
after closing. The merger is expected to create significant revenue
synergies from increased sales, which will stem from the combined
company's expanded sales reach and product portfolio, as well as from
cross-selling of the complementary product portfolio to the existing
combined customer base. Beginning 18 months after the close of the
transaction, the combined company also expects to be generating
between $7 and $8 million of annual net cost synergies, primarily
resulting from several cost avoidance measures including the better
allocation of current and future resources, the reduction in future
recruitment costs, and the reduction in shared G&A expenses and
corporate overhead, as the combined company continues to grow. In
addition, the combined company expects to achieve between $3 and $4
million in annual tax savings also beginning 18 months after the
transaction closes.
-
Attractive Long-Term Target Operating Model: On a pro forma
basis, the combined company expects to significantly improve its
long-term operating model compared with Stratasys' current standalone
model. Longer-term, the combined company expects to achieve:
-
Annual revenue growth of at least 20 percent;
-
Non-GAAP operating income as a percent of sales of between 20 and
25 percent;
-
An effective tax rate of between 15 and 20 percent; and
-
Non-GAAP net income as a percent of sales of between 16 and 21
percent.
Approvals and Timing
The transaction, which is expected to be completed in the third quarter
of 2012, is subject to, among other things, approval by Stratasys
shareholders, registration of the Objet shares issuable to Stratasys
shareholders with the Securities and Exchange Commission, the expiration
or termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the satisfaction of regulatory requirements and other customary closing
conditions. The approval by the Objet shareholders is required for
certain actions related to the Merger. Stratasys has entered into a
voting agreement with the Objet shareholders holding the requisite
majority for said actions to secure the vote. The transaction will be
taxable to Stratasys shareholders.
Preliminary First Quarter 2012 Financial Results
Today, Stratasys also announced preliminary financial results for the
first quarter ended March 31, 2012. For the first quarter Stratasys
expects to report revenue of approximately $45.0 million, a 31 percent
increase compared with $34.3 million reported during the same period
last year. Stratasys also expects to report non-GAAP net income of
approximately $5.6 million to $6.3 million for the first quarter, or
$0.27 to $0.29 per share, compared with $4.4 million, or $0.21 per share
reported during the same period of last year. GAAP net income for the
first quarter is expected to be approximately $4.3 million to $4.7
million, or $0.20 to $0.22 per share, compared with $5.0 million, or
$0.23 per share, reported during the same period of last year. These
numbers are preliminary and represent the most current information
available to management. Stratasys plans to provide full financial
results and updated 2012 guidance for Stratasys on a standalone basis
during its first quarter financial results conference call scheduled for
May 9, 2012. Items excluded in the non-GAAP calculation include
amortization expense related to the acquisition of Solidscape, Inc.
intangible assets; stock compensation expense; the gain on sale of an
equity investment during the first quarter 2011; and the expenses
associated with the company's current efforts to combine with Objet Ltd.
Conference Call and Webcast
A conference call to discuss the transaction is scheduled for April 16,
2012 at 7:30 a.m. Central Time / 8:30 a.m. Eastern Time / 3:30 p.m.
Israel Time. To participate by telephone, the U.S. dial-in number is
(888) 562-3654, and the international dial-in is (973) 582-2703. Please
reference conference ID# 70816946. Participants are advised to dial into
the call at least ten minutes prior to the call start time to register.
The conference call will be also available via live webcast on the
Stratasys and Objet web sites at www.stratasys.com
under the "Investors" tab and http://www.objet.com/NEWS_EVENTS/Press_Releases/Merger/.
A presentation will accompany the conference call and will be posted ten
minutes prior to the start of the call. These slides may be accessed on
the Stratasys and Objet websites.
A replay of this conference call may be accessed by webcast or by
telephone. To access the replay, please dial (800) 585-8367 (U.S.) or
(404) 537-3406 (international) and reference conference ID# 70816946.
The replay and webcast will be available through April 30, 2012.
Advisors
Piper Jaffray & Co. is acting as financial advisor to Stratasys and
rendered an opinion, from a financial point of view, as to the fairness
to the Stratasys shareholders of the exchange ratio provided for in the
merger. The firms McLaughlin & Stern, LLP, Richards, Layton & Finger,
P.A., Latham & Watkins LLP, and Fischer Behar Chen Well Orion & Co. are
acting as Stratasys' legal advisors. J.P. Morgan Securities LLC is
acting as financial advisor to Objet and the firms Meitar Liquornik Geva
& Leshem Brandwein and Cooley LLP are acting as its legal advisors.
Cautionary Statement Regarding Forward-Looking Statements
All statements herein that are not historical facts or that include such
words as "expects," "anticipates," "projects," "estimates," "vision,"
"could," "potential," "plan", "intends", "desires", "assume" or
"believes" or similar words constitute forward-looking statements
covered by the safe harbor protection of the Private Securities
Litigation Reform Act of 1995. Except for the historical information
herein, the matters discussed in this news release are forward-looking
statements that involve risks and uncertainties. These include
statements regarding the expected timing and ultimate closing of the
merger with Objet, as well as the financial and operating results of the
combined company after, and the anticipated benefits of, the merger; the
size of the 3D printing market; our objectives for the marketing and
sale of our Dimension® and uPrint® 3D Printers; our support removal
systems; and our Fortus® 3D Production Systems, particularly for use in
direct digital manufacturing (DDM); the demand for our proprietary
consumables; the expansion of our paid parts service; and our beliefs
with respect to the growth in the demand for our products. Actual
results may differ from those expressed or implied in our
forward-looking statements. Such forward-looking statements involve and
are subject to certain risks and uncertainties, which may cause our
actual results to differ materially from those discussed in a
forward-looking statement. Risks and uncertainties that may affect our
business include our ability to penetrate the 3D printing market; the
success of our distribution agreement with HP; our ability to achieve
the growth rates experienced in preceding quarters; our ability to
introduce, produce and market consumable materials, and the market
acceptance of these materials; the impact of competitive products and
pricing; our timely development of new products and materials and market
acceptance of those products and materials; the success of our recent
R&D initiative to expand the DDM capabilities of our core FDM
technology; the success of our RedEye On Demand™ and other paid
parts services; our ability to obtain the necessary approvals, including
the affirmative vote of the Stratasys shareholders, and to satisfy the
necessary closing conditions in order to successfully close the merger;
our ability to successfully integrate and market the combined company's
products; the combined company's ability to achieve the expected revenue
targets, the combined company's ability to attract and retain
management; and the combined company's ability to protect and defend
intellectual property. These statements represent beliefs and
expectations only as of the date they were made. We may elect to update
forward-looking statements, but we expressly disclaim any obligation to
do so, even if our beliefs and expectations change. In addition to the
statements described above, such forward-looking statements are subject
to the risks and uncertainties described more fully in our reports filed
or to be filed with the Securities and Exchange Commission, including
our annual reports on Form 10-K and quarterly reports on Form 10-Q.
Non-GAAP Discussion
The information discussed within this release includes financial results
that are in accordance with accounting principles generally accepted in
the United States (GAAP). In addition, certain non-GAAP financial
measures have been provided that exclude certain charges, expenses and
income. The non-GAAP measures should be read in conjunction with the
corresponding GAAP measures and should be considered in addition to, and
not as an alternative or substitute for, the measures prepared in
accordance with GAAP. The non-GAAP financial measures are provided in an
effort to provide information that investors may deem relevant to
evaluate results from the company's core business operations and to
compare the company's performance with prior periods. The non-GAAP
financial measures primarily identify and exclude certain discrete
items, such as the warrant charge, restructuring expenses, amortization
expenses and expenses associated with stock-based compensation required
under ASC 718. The company uses these non-GAAP financial measures for
evaluating comparable financial performance against prior periods.
This release is also available on the Stratasys and Objet web sites at www.stratasys.com
and www.objet.com.
Important Information for Investors and Shareholders
In connection with the combination of Objet and Stratasys pursuant to an
Agreement and Plan of Merger (the "Merger"), Objet will file with the
Securities and Exchange Commission (the "SEC") a registration statement
on Form F-4, which will include a proxy statement/prospectus of
Stratasys and a prospectus of Objet, as well as other relevant materials
in connection with the proposed transaction. Stratasys will concurrently
file the same proxy statement/prospectus with the SEC and will mail it
to Stratasys shareholders for purposes of soliciting proxies for voting
in favor of approving the Merger at a special meeting of Stratasys
stockholders called for the purpose of approving the Merger Agreement
and the Merger. INVESTORS AND SHAREHOLDERS ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT MATERIALS WHEN THEY BECOME
AVAILABLE BECAUSE THESE MATERIALS WILL CONTAIN IMPORTANT INFORMATION
ABOUT STRATASYS, OBJET AND THE PROPOSED TRANSACTION. The proxy
statement/prospectus and other relevant materials (when they become
available) and any other related documents filed with the SEC may be
obtained free of charge on the SEC's website at www.sec.gov
or via the Stratasys website at www.stratasys.com.
Shareholders may also obtain a copy of the SEC filings free of charge
upon written request to Stratasys, Attention: Shane Glenn, Director of
Investor Relations, 7665 Commerce Way, Eden Prairie, Minnesota 55344.
Stratasys' executive officers and directors may be deemed to be
participants in the solicitation of proxies from the shareholders of
Stratasys in connection with the Merger. Information about Stratasys'
executive officers and directors and their ownership of Stratasys common
stock will be set forth in Stratasys' amended Annual Report on Form 10-K
for the year ended December 31, 2011, which will be filed with the SEC.
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be any
sale of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction.
About Stratasys
Stratasys Inc. is a maker of additive-manufacturing machines for
prototyping and producing plastic parts. The company markets under the
brands uPrint and Dimension 3D Printers and Fortus Production 3D
Printers. The company also operates RedEye On Demand, a
digital-manufacturing service for prototypes and production parts.
Stratasys manufactures 3D printers for Hewlett Packard, which it sells
under the brand Designjet3D. In 2011 Stratasys acquired 3D printer maker
Solidscape Inc. According to Wohlers Report 2011, Stratasys had a
41-percent market share in 2010, and has been the unit market leader for
the ninth consecutive year. Stratasys patented and owns the Fused
Deposition Modeling (FDM®) process. The process creates functional
prototypes and manufactured goods directly from any 3D CAD program,
using high-performance industrial thermoplastics. The company holds more
than 285 granted or pending additive-manufacturing patents globally.
Stratasys products are used in the aerospace, defense, automotive,
medical, business and industrial equipment, education, architecture, and
consumer-product industries. Online at: www.Stratasys.com
FDM, Dimension, Fortus, uPrint and Stratasys are registered trademarks
of Stratasys Inc. Fused Deposition Modeling is a trademark of Stratasys
Inc.
About Objet
Objet Ltd. is a leading provider of high quality, cost effective
inkjet-based 3D printing systems and materials. A global company, Objet
has offices in North America, Europe, Japan, China, Hong Kong, and India.
Objet's 3D printing systems and materials are ideal for any company
involved in the manufacture or design of physical products using 3D
software or other 3D content. Objet's solutions can be typically found
in sectors such as consumer goods and electronics, aerospace and
defense, automotive, education, dental, medical, medical devices,
architecture, industrial machinery, footwear, sporting goods, toys and
service bureaus.
Founded in 1998, the company has thousands of customers worldwide
including a substantial share of the relevant Fortune 100 and Fortune
500. Its award winning technology (13 awards in six years) is based upon
more than 110 patents and patent pending inventions.
Objet's 3D printers are available in a range of form-factors, from cost
effective desktop 3D printers ideal for entry-level professionals up to
industrial scale multi-material Connex machines for front-line designers
and top manufacturers. Objet's 3D printers feature PolyJet™ technology
that simultaneously jets two materials, the industry's highest
resolution 3D printing quality, based on 16-micron (0.0006 in.)
super-thin layering, wide material versatility (about 70 materials,
ranging from rigid to rubber-like, transparent to opaque, and standard
to ABS-grade engineering plastics), office friendliness and
ease-of-operation.
For more information, visit www.objet.com.
Stratasys
Investors:
Shane Glenn, 952-294-3416
Director,
Investor Relations
shane.glenn@stratasys.com
or
MacKenzie
Partners
Dan Burch / Larry Dennedy, 212-929-5500
or
Media:
Joe
Hiemenz, 952-906-2726
joe.hiemenz@stratasys.com
or
Joele
Frank, Wilkinson Brimmer Katcher
Jamie Moser / Andi Rose / Jennifer
Beugelmans, 212-355-4449
or
Objet
Investors:
Erez
Simha, +972-8-931-4314
COO & CFO
ir@objet.com
or
Media:
Conover
Tuttle Pace
Todd Graff, 617-412-4000
tgraff@ctpboston.com
Source: Stratasys, Inc.
News Provided by Acquire Media
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