Stratasys Ltd SC 14D9/A, filed Jun 20, 2023
Stratasys Ltd. (SSYS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION
STATEMENT UNDER SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 6)
STRATASYS LTD.
(Name of Subject Company)
STRATASYS LTD.
(Name of Persons Filing Statement)
Ordinary Shares, par value NIS 0.01 per share
(Title of Class of Securities)
M85548101
(CUSIP Number of Class of Securities)
Vered Ben Jacob
Chief Legal Officer
1 Holtzman Street
Science Park, P.O. Box 2496
Rehovot 76124, Israel
Tel: +972-74-745-4029
(Name, address, and telephone number of persons authorized to receive notices and
communications on behalf of the person filing statement)
Copies to:
| J. David Chertok, Adv. Dr. Shachar Hadar, Adv. Jonathan Atha, Adv. Meitar Law Offices 16 Abba Hillel Road Ramat-Gan 5250608, Israel Tel: +972-3-6103186 |
Adam O. Emmerich, Esq. Viktor Sapezhnikov, Esq. Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Tel: (212) 403-1000 |
| ☐ | Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. |
This Amendment No. 6 to Schedule 14D-9 amends and supplements the Solicitation/Recommendation Statement on Schedule 14D-9 (as amended from time to time, the “Statement”) originally filed by Stratasys Ltd., an Israeli company (“Stratasys”), with the Securities and Exchange Commission (the “SEC”) on May 30, 2023, relating to the unsolicited tender offer by Nano Dimension Ltd., an Israeli company (“Nano”), to purchase up to 27,925,689 ordinary shares, par value NIS 0.01 per share, of Stratasys (“Stratasys ordinary shares”) not already owned by Nano, which, together with the Stratasys ordinary shares already owned by Nano, represent no more than 55% (and at least 53%) of the issued and outstanding Stratasys ordinary shares upon consummation of the tender offer, for $18.00 per share in cash, less any required withholding taxes and without interest, upon the terms and conditions set forth in the Offer to Purchase dated May 25, 2023 and in the related Letter of Transmittal and the related Notice of Objection contained in the Tender Offer Statement on Schedule TO filed by Nano with the SEC on May 25, 2023. Except as specifically noted herein, the information set forth in the Statement remains unchanged.
Item 9. Exhibits
Item 9 of the Statement is hereby amended and supplemented by adding the following exhibits:
| Incorporated by Reference to Filings Indicated |
||||||||||||
| Exhibit Number | Exhibit Description | Form | File No. | Exhibit | Filing Date | Filed Herewith | ||||||
| (a)(11) | Press Release, dated June 20, 2023 | X | ||||||||||
| (a)(12) | Website, dated June 20, 2023 | X | ||||||||||
| (a)(13) | Investor Presentation, dated June 20, 2023 | X | ||||||||||
| (a)(14) | Letter to Employees, dated June 20, 2023 | X | ||||||||||
| (a)(15) | Transcript of Conference Call, dated June 20, 2023 | X | ||||||||||
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
| Dated: June 20, 2023 | ||
| STRATASYS LTD. | ||
| By: | /s/ Yoav Zeif | |
| Name: | Yoav Zeif | |
| Title: | Chief Executive Officer | |
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Exhibit (a)(11)
Stratasys Files Preliminary Form F-4 and Additional Revenue and EBITDA Estimates for Superior Value Combination with Desktop Metal
Transaction Will Form Additive Manufacturing Leader with Comprehensive Offering, Combining the Most Advanced Metal Manufacturing Solution with Most Comprehensive Polymer and Operational Capabilities
Combined Company Expected to Generate More Than $1.6 Billion of Revenue and More Than $300 Million of EBITDA in 2026 at Base Case
Stratasys to Host Conference Call to Discuss Desktop Metal Combination and Unsolicited 3D Systems Proposal Today at 10:30 A.M. ET
Stratasys Board Urges Stratasys Shareholders NOT to Tender Shares AND to File a Notice of Objection to Nano Dimension’s Unsolicited, Inadequate and Coercive Partial Tender Offer
MINNEAPOLIS & REHOVOT, Israel – June 20, 2023 – Stratasys Ltd. (Nasdaq: SSYS) (“Stratasys” or the “Company”), a leader in polymer 3D printing solutions, today filed a preliminary Form F-4 with the U.S. Securities and Exchange Commission and certain revenue and EBITDA estimates for its proposed combination with Desktop Metal, Inc. (NYSE: DM) (“Desktop Metal”), which will create a next-generation additive manufacturing company with enhanced growth and profitability. The Desktop Metal transaction will advance Stratasys’ strategy of leading additive manufacturing into mass production. The estimates, and additional information on the compelling benefits of the transaction, are included in an investor presentation that is available at investors.stratasys.com and www.NextGenerationAM.com.
Highlights of the investor presentation include:
| ● | Metal Technology Gives Combined Company Comprehensive Solutions Offering: Stratasys’ mission to lead additive manufacturing into mass production will be accelerated by having a leading metal manufacturing solution alongside its robust polymer offering. Stratasys has been interacting with Desktop Metal for eight years and began reviewing its metals technology more than two years ago. After extensive analysis of the metal landscape, Stratasys believes Desktop Metal has the best and most advanced technology for metal mass production. With low cost per part, a diversified product offering and superior consistency and reliability, Desktop Metal’s binder jetting offering fulfills key requirements for manufacturing. With Desktop Metal’s high-growth metals portfolio, Stratasys’ total addressable market for manufacturing is expected to double by 2027. |
| ● | Financial Estimates Reflect Base Case of Revenue and EBITDA for Combined Company Used by the Stratasys Board in Evaluating Desktop Metal: The combination creates an at-scale growth additive manufacturing company that is expected to generate more than $1.6 billion of revenue and more than $300 million of EBITDA in 2026 at base case, for a 20% pro forma EBITDA margin. This growth reflects a top-line compound annual growth rate (“CAGR”) of 19% from 2022 to 2026, compared to an estimated 14% CAGR for standalone Stratasys over the same period. These estimates include $50 million in run-rate cost synergies and $50 million in run-rate revenue synergies expected to be fully realized by 2025. Even in the downside case, the combined company is expected to generate more than $1.4 billion of revenue and $200 million of EBITDA in 2026, for a 14% pro forma EBITDA margin. The expected synergies are in addition to Desktop Metal’s $100 million annualized cost savings plan, of which $75 million has already been captured, enabling generation of positive operating cash flow in the 12 months following the close of the combination. |
| ● | Significant Expansion in Stratasys’ Dental Opportunity: Beyond its leading metal technology, Desktop Metal has a strong and diversified portfolio, with approximately 70% of its business consisting of leading positions across dental and digital castings verticals, and premier technology in large format industrial photopolymer. In particular, the combination significantly enhances Stratasys’ offering in the rapidly growing dental vertical, which comprises 35% of Desktop Metal’s business, and has an expected market CAGR of 30% from 2022 to 2027. Together with Stratasys’ material roadmap from its recent acquisition of Covestro’s additive manufacturing business, Desktop Metal’s chairside and lab dental solutions expand Stratasys’ dental addressable market, including through penetration of the $30 billion crown and bridges market, enhancing gross margin and generating additional recurring revenue. |
| ● | Expansive and Complementary IP Portfolio with Robust Innovation Engine: Desktop Metal’s innovative portfolio and pipeline stands out among additive manufacturing players, with strong IP across applications. Desktop Metal continues to develop breakthrough technologies to augment its young, manufacturing-focused portfolio, with recent significant developments across metal binder jetting, binders, furnace and software technologies, among others. The combined company will have more than 3,400 active patents and pending patent applications and one of the largest R&D and engineering teams in the industry, with over 800 scientists and engineers focused on driving innovation. |
| ● | Innovation and Growth Assets Complement Enhanced Market Access: In addition to its leading polymer capabilities and broad portfolio of technologies and solutions, Stratasys has the best operations and go-to-market capabilities in the industry. Stratasys and Desktop Metal are the two most innovative companies in additive manufacturing and will combine to form the first company covering the full manufacturing lifecycle, with enhanced market access and more than 27,000 industrial customers across industries and applications. |
Under the terms of the previously announced merger agreement with Desktop Metal, Desktop Metal stockholders will receive 0.123 ordinary shares of Stratasys for each share of Desktop Metal Class A common stock. The transaction, which is expected to be completed in the fourth quarter of 2023, is subject to customary closing conditions, including the approval of Stratasys’ shareholders and Desktop Metal’s stockholders and the receipt of certain governmental and regulatory approvals.
Stratasys Board Unanimously Determines Proposal from 3D Systems Does Not Constitute a Superior Proposal to Its Agreement with Desktop Metal
In a separate release issued today, Stratasys also announced that its Board of Directors has unanimously determined that the May 30, 2023 unsolicited non-binding indicative proposal from 3D Systems Corporation (NYSE: DDD) (“3D Systems”) to acquire Stratasys does not constitute a “Superior Proposal” and does not provide a basis upon which to enter into discussions with 3D Systems pursuant to the terms of the merger agreement with Desktop Metal.
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Stratasys Board Urges Shareholders NOT to Tender Shares AND to File a Notice of Objection to Nano Dimension’s Unsolicited, Inadequate and Coercive Partial Tender Offer
As previously announced, Stratasys’ Board has unanimously determined that the partial tender offer by Nano Dimension Ltd. (Nasdaq: NNDM) (“Nano”) to acquire ordinary shares of Stratasys for $18.00 per share in cash substantially undervalues the Company and is NOT in the best interests of Stratasys shareholders.
Accordingly, the Board unanimously recommends that shareholders DO NOT tender shares to the partial offer.
The Board also urges shareholders to deliver a Notice of Objection to express opposition to the tender offer. Under Israeli tender offer rules, Nano’s tender offer will fail if the shares covered by submitted Notices of Objection are greater than or equal to the number of shares tendered in the offer.
If you are a Stratasys shareholder and have not tendered any of your Stratasys ordinary shares, you can still tender your shares within the four-day mandatory offering period if the conditions to the tender offer become satisfied.
For assistance, you can contact your broker or Stratasys’ information agent, Morrow Sodali LLC (“Morrow Sodali”), toll-free at (800) 622-5200 or by email at SSYS@info.morrowsodali.com. Additional information regarding how to deliver a Notice of Objection can be found at www.NextGenerationAM.com/NanoObjection.
Conference Call, Investor Presentation and Q&A
Stratasys will host a pre-recorded audio webcast to discuss the pending combination with Desktop Metal and its determination regarding 3D Systems’ proposal today at 10:30 A.M. ET.
Stratasys has posted an accompanying presentation and Q&A on the Investor Relations section of its website and at www.NextGenerationAM.com.
The investor conference call will be available via webcast on Stratasys’ investor relations website at investors.stratasys.com or directly at the following web address:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=5HNHD1jM. The webcast will be available for six months at investors.stratasys.com or by accessing the above-provided web address.
To participate by telephone, the U.S. toll-free number is 877-524-8416 and the international dial-in is +1 412-902-1028. Investors are advised to dial into the call at least ten minutes prior to the call to register.
J.P. Morgan is acting as exclusive financial advisor to Stratasys, and Meitar Law Offices and Wachtell, Lipton, Rosen & Katz are serving as legal counsel.
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About Stratasys
Stratasys is leading the global shift to additive manufacturing with innovative 3D printing solutions for industries such as aerospace, automotive, consumer products, healthcare, fashion and education. Through smart and connected 3D printers, polymer materials, a software ecosystem, and parts on demand, Stratasys solutions deliver competitive advantages at every stage in the product value chain. The world’s leading organizations turn to Stratasys to transform product design, bring agility to manufacturing and supply chains, and improve patient care.
To learn more about Stratasys, visit www.stratasys.com, the Stratasys blog, Twitter, LinkedIn, or Facebook. Stratasys reserves the right to utilize any of the foregoing social media platforms, including the Company’s websites, to share material, non-public information pursuant to the SEC’s Regulation FD. To the extent necessary and mandated by applicable law, Stratasys will also include such information in its public disclosure filings.
Stratasys is a registered trademark and the Stratasys signet is a trademark of Stratasys Ltd. and/or its subsidiaries or affiliates. All other trademarks are the property of their respective owners.
Forward-Looking Statements
This document contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the actual results of Stratasys Ltd. and its consolidated subsidiaries (“Stratasys”) may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements.
Such forward-looking statements include statements relating to the proposed transaction between Stratasys and Desktop Metal, Inc. (“Desktop Metal”), including statements regarding the benefits of the transaction and the anticipated timing of the transaction, and information regarding the businesses of Stratasys and Desktop Metal, including expectations regarding outlook and all underlying assumptions, Stratasys’ and Desktop Metal’s objectives, plans and strategies, information relating to operating trends in markets where Stratasys and Desktop Metal operate, statements that contain projections of results of operations or of financial condition and all other statements other than statements of historical fact that address activities, events or developments that Stratasys or Desktop Metal intends, expects, projects, believes or anticipates will or may occur in the future. Such statements are based on management’s beliefs and assumptions made based on information currently available to management. All statements in this communication, other than statements of historical fact, are forward-looking statements that may be identified by the use of the words “outlook,” “guidance,” “expects,” “believes,” “anticipates,” “should,” “estimates,” and similar expressions. These forward-looking statements involve known and unknown risks and uncertainties, which may cause Stratasys’ or Desktop Metal’s actual results and performance to be materially different from those expressed or implied in the forward-looking statements. Factors and risks that may impact future results and performance include, but are not limited to those factors and risks described in Item 3.D “Key Information - Risk Factors”, Item 4 “Information on the Company”, and Item 5 “Operating and Financial Review and Prospects” in Stratasys’ Annual Report on Form 20-F for the year ended December 31, 2022 and Part 1, Item 1A, “Risk Factors” in Desktop Metal’s Annual Report on Form 10-K for the year ended December 31, 2022, each filed with the Securities and Exchange Commission (the “SEC”), and in other filings by Stratasys and Desktop Metal with the SEC. These include, but are not limited to: factors relating to the partial tender offer commenced by Nano Dimension Ltd. (“Nano”), including actions taken by Nano in connection with the offer, actions taken by Stratasys or its shareholders in respect of the offer and the effects of the offer on Stratasys’ businesses, or other developments involving Nano, the ultimate outcome of the proposed transaction between Stratasys and Desktop Metal, including the possibility that Stratasys or Desktop Metal shareholders will reject the proposed transaction; the effect of the announcement of the proposed transaction on the ability of Stratasys and Desktop Metal to operate their respective businesses and retain and hire key personnel and to maintain favorable business relationships; the timing of the proposed transaction; the occurrence of any event, change or other circumstance that could give rise to the termination of the proposed transaction; the ability to satisfy closing conditions to the completion of the proposed transaction (including any necessary shareholder approvals); other risks related to the completion of the proposed transaction and actions related thereto; changes in demand for Stratasys’ or Desktop Metal’s products and services; global market, political and economic conditions, and in the countries in which Stratasys and Desktop Metal operate in particular; government regulations and approvals; the extent of growth of the 3D printing market generally; the global macro-economic environment, including headwinds caused by inflation, rising interest rates, unfavorable currency exchange rates and potential recessionary conditions; the impact of shifts in prices or margins of the products that Stratasys or Desktop Metal sells or services Stratasys or Desktop Metal provides, including due to a shift towards lower margin products or services; the potential adverse impact that recent global interruptions and delays involving freight carriers and other third parties may have on Stratasys’ or Desktop Metal’s supply chain and distribution network and consequently, Stratasys’ or Desktop Metal’s ability to successfully sell both existing and newly-launched 3D printing products; litigation and regulatory proceedings, including any proceedings that may be instituted against Stratasys or Desktop Metal related to the proposed transaction; impacts of rapid technological change in the additive manufacturing industry, which requires Stratasys and Desktop Metal to continue to develop new products and innovations to meet constantly evolving customer demands and which could adversely affect market adoption of Stratasys’ or Desktop Metal’s products; and disruptions of Stratasys’ or Desktop Metal’s information technology systems.
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These risks, as well as other risks related to the proposed transaction, are included in the registration statement on Form F-4 and joint proxy statement/prospectus that has been filed with the Securities and Exchange Commission (“SEC”) in connection with the proposed transaction. While the list of factors presented here is, and the list of factors presented in the registration statement on Form F-4 are, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. For additional information about other factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to Stratasys’ and Desktop Metal’s respective periodic reports and other filings with the SEC, including the risk factors identified in Stratasys’ and Desktop Metal’s Annual Reports on Form 20-F and Form 10-K, respectively, and Stratasys’ Form 6-K reports that published its results for the quarter ended March 31, 2023, which it furnished to the SEC on May 16, 2023, and Desktop Metal’s most recent Quarterly Reports on Form 10-Q. The forward-looking statements included in this communication are made only as of the date hereof. Neither Stratasys nor Desktop Metal undertakes any obligation to update any forward-looking statements to reflect subsequent events or circumstances, except as required by law.
No Offer or Solicitation
This communication is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, 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. No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
Important Additional Information
In connection with the proposed transaction, Stratasys filed with the SEC a registration statement on Form F-4 that includes a joint proxy statement of Stratasys and Desktop Metal and that also constitutes a prospectus of Stratasys. Each of Stratasys and Desktop Metal may also file other relevant documents with the SEC regarding the proposed transaction. This document is not a substitute for the joint proxy statement/prospectus or registration statement or any other document that Stratasys or Desktop Metal may file with the SEC. The registration statement has not yet become effective. After the registration statement is effective, the definitive joint proxy statement/prospectus will be mailed to shareholders of Stratasys and Desktop Metal. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of the registration statement and definitive joint proxy statement/prospectus and other documents containing important information about Stratasys, Desktop Metal and the proposed transaction, once such documents are filed with the SEC through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with, or furnished, to the SEC by Stratasys will be available free of charge on Stratasys’ website at https://investors.stratasys.com/sec-filings. Copies of the documents filed with the SEC by Desktop Metal will be available free of charge on Desktop Metal’s website at https://ir.desktopmetal.com/sec-filings/all-sec-filings.
This communication is not an offer to purchase or a solicitation of an offer to sell the ordinary shares of Stratasys. In response to a tender offer commenced by Nano, Stratasys has filed with the Securities and Exchange Commission a Solicitation/Recommendation Statement on Schedule 14D-9. STRATASYS SHAREHOLDERS ARE ADVISED TO READ STRATASYS’ SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WHEN THEY BECOME AVAILABLE BEFORE MAKING ANY DECISION WITH RESPECT TO ANY TENDER OFFER BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Stratasys shareholders may obtain a copy of the Solicitation/Recommendation Statement on Schedule 14D-9, as well as any other documents filed by Stratasys in connection with the tender offer by Nano or one of its affiliates, free of charge at the SEC’s website at www.sec.gov. In addition, investors and security holders may obtain free copies of these documents from Stratasys by directing a request to Stratasys Ltd., 1 Holtzman Street, Science Park, P.O. Box 2496, Rehovot 7612, Israel, Attn: Yonah Lloyd, VP Investor Relations, or by calling +972-74-745-4029.
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Participants in the Solicitation
Stratasys, Desktop Metal and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about the directors and executive officers of Stratasys, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in Stratasys’ proxy statement for its 2022 Annual General Meeting of Shareholders, which was filed with the SEC on August 8, 2022, and Stratasys’ Annual Report on Form 20-F for the fiscal year ended December 31, 2022, which was filed with the SEC on March 3, 2023. Information about the directors and executive officers of Desktop Metal, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in Desktop Metal’s proxy statement for its 2023 Annual Meeting of Stockholders, which was filed with the SEC on April 25, 2023 and Desktop Metal’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on March 1, 2023. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC regarding the proposed transaction. Investors should read the joint proxy statement/prospectus carefully before making any voting or investment decisions. You may obtain free copies of these documents from Stratasys or Desktop Metal using the sources indicated above.
Use of Non-GAAP Financial Measures
This communication contains certain forward-looking non-GAAP measures, which are based on internal forecasts and represent management’s best judgment. Reconciliation of such measures to the most directly comparable GAAP financial measures cannot be furnished without unreasonable efforts due to inherent difficulty in forecasting the amount and timing of certain adjustments that are necessary for such reconciliations and which may significantly impact our GAAP results. In particular, sufficient information is not available to calculate certain adjustments that are required to prepare a forward-looking statement of revenue, margin and EBITDA in accordance with GAAP for fiscal years 2024 and beyond. Stratasys also believes that such reconciliations would also imply a degree of precision that would be confusing or inappropriate for these forward-looking measures, which are inherently uncertain. All revenue, margin, EBITDA and other P&L references are non-GAAP unless specified otherwise.
Contacts
Investor Relations
Yonah Lloyd
CCO / VP Investor Relations
Yonah.Lloyd@stratasys.com
Morrow Sodali
SSYS@info.morrowsodali.com
(800) 662-5200
(203) 658-9400
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U.S. Media
Ed Trissel / Joseph Sala / Kara Brickman
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
Israel Media
Rosa Coblens
VP Sustainability, Public Relations IL & Global Internal Communications
Rosa.Coblens@stratasys.com
Yael Arnon
Scherf Communications
yaela@scherfcom.com
+972527202703
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Exhibit (a)(12)
https://www.nextgenerationam.com/stratasys-combination-with-desktop-metal
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Exhibit (a)(13)
Delivering superior value with Desktop Metal combination J U N E 2 0 2 3
HIGHLY PRELIMINARY DRAFT – SUBJECT TO REVISION Disclaimer 2 Forward - Looking Statements This document contains forward - looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the actual results of Stratasys Ltd. and its consolidated subsidiaries (“Stratasys”) may differ materially from those expressed or implied by such forward - looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward - looking statements. Such forward - looking statements include statements relating to the proposed transaction between Stratasys and Desktop Metal, Inc. (“Desktop Metal”), including statements regarding the benefits of the transaction and the anticipated timing of the transaction, and information regarding the businesses of Stratasys and Desktop Metal, including expectations regarding outlook and all underlying assumptions, Stratasys’ and Desktop Metal’s objectives, plans and strategies, information relating to operating trends in markets where Stratasys and Desktop Metal operate, statements that contain projections of results of operations or of financial condition and all other statements other than statements of historical fact that address activities, events or developments that Stratasys or Desktop Metal intends, expects, projects, believes or anticipates will or may occur in the future. Such statements are based on management’s beliefs and assumptions made based on information currently available to management. All statements in this communication, other than statements of historical fact, are forward - looking statements that may be identified by the use of the words “outlook,” “guidance,” “expects,” “believes,” “anticipates,” “should,” “estimates,” and similar expressions. These forward - looking statements involve known and unknown risks and uncertainties, which may cause Stratasys’ or Desktop Metal’s actual results and performance to be materially different from those expressed or implied in the forward - looking statements. Factors and risks that may impact future results and performance include, but are not limited to those factors and risks described in Item 3.D “Key Information - Risk Factors”, Item 4 “Information on the Company”, and Item 5 “Operating and Financial Review and Prospects” in Stratasys’ Annual Report on Form 20 - F for the year ended December 31, 2022 and Part 1, Item 1A, “Risk Factors” in Desktop Metal’s Annual Report on Form 10 - K for the year ended December 31, 2022, each filed with the Securities and Exchange Commission (the “SEC”), and in other filings by Stratasys and Desktop Metal with the SEC. These include, but are not limited to: factors relating to the partial tender offer commenced by Nano Dimension Ltd. (“Nano”), including actions taken by Nano in connection with the offer, actions taken by Stratasys or its shareholders in respect of the offer and the effects of the offer on Stratasys’ businesses, or other developments involving Nano, the ultimate outcome of the proposed transaction between Stratasys and Desktop Metal, including the possibility that Stratasys or Desktop Metal shareholders will reject the proposed transaction; the effect of the announcement of the proposed transaction on the ability of Stratasys and Desktop Metal to operate their respective businesses and retain and hire key personnel and to maintain favorable business relationships; the timing of the proposed transaction; the occurrence of any event, change or other circumstance that could give rise to the termination of the proposed transaction; the ability to satisfy closing conditions to the completion of the proposed transaction (including any necessary shareholder approvals); other risks related to the completion of the proposed transaction and actions related thereto; changes in demand for Stratasys’ or Desktop Metal’s products and services; global market, political and economic conditions, and in the countries in which Stratasys and Desktop Metal operate in particular; government regulations and approvals; the extent of growth of the 3D printing market generally; the global macro - economic environment, including headwinds caused by inflation, rising interest rates, unfavorable currency exchange rates and potential recessionary conditions; the impact of shifts in prices or margins of the products that Stratasys or Desktop Metal sells or services Stratasys or Desktop Metal provides, including due to a shift towards lower margin products or services; the potential adverse impact that recent global interruptions and delays involving freight carriers and other third parties may have on Stratasys’ or Desktop Metal’s supply chain and distribution network and consequently, Stratasys’ or Desktop Metal’s ability to successfully sell both existing and newly - launched 3D printing products; litigation and regulatory proceedings, including any proceedings that may be instituted against Stratasys or Desktop Metal related to the proposed transaction; impacts of rapid technological change in the additive manufacturing industry, which requires Stratasys and Desktop Metal to continue to develop new products and innovations to meet constantly evolving customer demands and which could adversely affect market adoption of Stratasys’ or Desktop Metal’s products; and disruptions of Stratasys’ or Desktop Metal’s information technology systems. These risks, as well as other risks related to the proposed transaction, are included in the registration statement on Form F - 4 and joint proxy statement/prospectus that has been filed with the Securities and Exchange Commission (“SEC”) in connection with the proposed transaction. While the list of factors presented here is, and the list of factors presented in the registration statement on Form F - 4 are, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. For additional information about other factors that could cause actual results to differ materially from those described in the forward - looking statements, please refer to Stratasys’ and Desktop Metal’s respective periodic reports and other filings with the SEC, including the risk factors identified in Stratasys’ and Desktop Metal’s Annual Reports on Form 20 - F and Form 10 - K, respectively, and Stratasys’ Form 6 - K reports that published its results for the quarter ended March 31, 2023, which it furnished to the SEC on May 16, 2023, and Desktop Metal’s most recent Quarterly Reports on Form 10 - Q. The forward - looking statements included in this communication are made only as of the date hereof. Neither Stratasys nor Desktop Metal undertakes any obligation to update any forward - looking statements to reflect subsequent events or circumstances, except as required by law. No Offer or Solicitation This communication is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, 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. No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
HIGHLY PRELIMINARY DRAFT – SUBJECT TO REVISION Disclaimer 3 Important Additional Information In connection with the proposed transaction, Stratasys filed with the SEC a registration statement on Form F - 4 that includes a joint proxy statement of Stratasys and Desktop Metal and that also constitutes a prospectus of Stratasys. Each of Stratasys and Desktop Metal may also file other relevant documents with the SEC regarding the proposed transaction. This document is not a substitute for the joint proxy statement/prospectus or registration statement or any other document that Stratasys or Desktop Metal may file with the SEC. The registration statement has not yet become effective. After the registration statement is effective, the definitive joint proxy statement/prospectus will be mailed to shareholders of Stratasys and Desktop Metal. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of the registration statement and definitive joint proxy statement/prospectus and other documents containing important information about Stratasys, Desktop Metal and the proposed transaction, once such documents are filed with the SEC through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with, or furnished, to the SEC by Stratasys will be available free of charge on Stratasys’ website at https://investors.stratasys.com/sec - filings. Copies of the documents filed with the SEC by Desktop Metal will be available free of charge on Desktop Metal’s website at https://ir.desktopmetal.com/sec - filings/all - sec - filings. This communication is not an offer to purchase or a solicitation of an offer to sell the ordinary shares of Stratasys. In response to a tender offer commenced by Nano, Stratasys has filed with the Securities and Exchange Commission a Solicitation/Recommendation Statement on Schedule 14D - 9. STRATASYS SHAREHOLDERS ARE ADVISED TO READ STRATASYS’ SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D - 9 AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WHEN THEY BECOME AVAILABLE BEFORE MAKING ANY DECISION WITH RESPECT TO ANY TENDER OFFER BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Stratasys shareholders may obtain a copy of the Solicitation/Recommendation Statement on Schedule 14D - 9, as well as any other documents filed by Stratasys in connection with the tender offer by Nano or one of its affiliates, free of charge at the SEC’s website at www.sec.gov. In addition, investors and security holders may obtain free copies of these documents from Stratasys by directing a request to Stratasys Ltd., 1 Holtzman Street, Science Park, P.O. Box 2496, Rehovot 7612, Israel, Attn: Yonah Lloyd, VP Investor Relations, or by calling +972 - 74 - 745 - 4029. Participants in the Solicitation Stratasys, Desktop Metal and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about the directors and executive officers of Stratasys, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in Stratasys’ proxy statement for its 2022 Annual General Meeting of Shareholders, which was filed with the SEC on August 8, 2022, and Stratasys’ Annual Report on Form 20 - F for the fiscal year ended December 31, 2022, which was filed with the SEC on March 3, 2023. Information about the directors and executive officers of Desktop Metal, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in Desktop Metal’s proxy statement for its 2023 Annual Meeting of Stockholders, which was filed with the SEC on April 25, 2023 and Desktop Metal’s Annual Report on Form 10 - K for the fiscal year ended December 31, 2022, which was filed with the SEC on March 1, 2023. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC regarding the proposed transaction. Investors should read the joint proxy statement/prospectus carefully before making any voting or investment decisions. You may obtain free copies of these documents from Stratasys or Desktop Metal using the sources indicated above. Use of Non - GAAP Financial Measures This communication contains certain forward - looking non - GAAP measures, which are based on internal forecasts and represent management’s best judgment. Reconciliation of such measures to the most directly comparable GAAP financial measures cannot be furnished without unreasonable efforts due to inherent difficulty in forecasting the amount and timing of certain adjustments that are necessary for such reconciliations and which may significantly impact our GAAP results. In particular, sufficient information is not available to calculate certain adjustments that are required to prepare a forward - looking statement of revenue, margin and EBITDA in accordance with GAAP for fiscal years 2024 and beyond. Stratasys also believes that such reconciliations would also imply a degree of precision that would be confusing or inappropriate for these forward - looking measures, which are inherently uncertain. All revenue, margin, EBITDA and other P&L references are non - GAAP unless specified otherwise.
Agenda Desktop Metal is highly complementary and creates significant value Assessing 3D Systems proposal 1 4 2 Desktop Metal is a superior combination to 3D Systems 3
Desktop Metal is highly complementary to Stratasys with strong innovative growth drivers Combining the best metal innovation company with the best Go - To - Market company to create an AM powerhouse 1 1 . Stratasys’ (“SSYS”) mission to lead the Additive Manufacturing (“AM”) into mass production will be accelerated by having a metal manufacturing solution alongside its robust polymer offering 2 2 . Through extensive analysis of the metal landscape , we believe Desktop Metal (“DM”) has the best and most advanced technology for mass production 3 3 . DM brings a complementary portfolio of growth assets which will be accelerated by Stratasys’ extensive market reach to create immediate to long - term impact 4 4 . DM’s innovative portfolio and technology pipeline stands out amongst AM players with strong IP across applications 5 5 . This combination will create the first >$1B AM company , with sufficient scale to lead the AM industry into mass production, and yield synergies $50M+ in cost and additional $50M in revenue synergies 6 6 . The combined business is expected to generate above $300M of EBITDA in 2026 5 Growth Innovation Mass Production Scale Performance
Creating an AM powerhouse marked by innovation, operating efficiency and unmatched execution The first industrial AM company covering the full manufacturing lifecycle from design to mass production in both polymers and metal Innovation leader in polymer 3D printing Best operations and GTM in AM A leader in mass production of metal, ceramics and restorative dental 3D printing Best - in - class metal innovation in AM 6
$8 $18 $44 ’17 - ’22 CAGR 14% 15% 26% 14% 2% 2017 2022 2027 ’22 – ’27 CAGR 7 DM’s metal offering for mass production will double our addressable market for manufacturing in 2027 ADDITIVE SEGMENT BY MATERIAL AND APPLICATION ($B) Service Bureaus Metal End Parts Polymer End Parts Prototyping High volume 32% Low volume Low volume High volume Source: Stratasys estimate based on: Wohler total market size and historical growth rate, Context for relative split between prototyping, polymer end parts, and metal end parts. Expected growth rate of prototyping and end use parts markets based on Voxel Matters (formerly 3dpbm) Stratasys’ mission to lead AM into mass production requires a metal manufacturing solution alongside its robust polymer offering
Through extensive analysis of the metal landscape, we believe DM has the best and most advanced technology for mass production 8 DM BINDER JETTING OFFERING… x +80% lower cost per part vs. DMLS 1 systems due to lower material cost and higher throughput (i.e.. 100X throughput of P - 50 vs. DMLS) Low cost x Robust and growing suite of 40+ materials including reactive alloys, ceramics and sand Diversified product offering x Ability to produce highly complex parts due to absence of support structure Geometric agility x Unique Software offering to deliver manufacturing accuracy x Most advanced AM dedicated sintering hardware and simulation tool Full scope solution x End - to - end sales support and service x High degree of customer satisfaction x Testimonials: https://youtu.be/RHeOculI9wE Consistency & reliability …FULFILLS KEY REQUIREMENTS FOR MANUFACTURING 2018 2022 …RESULTING IN HIGH - GROWTH METALS PORTFOLIO Source: SSYS management; 1 DMLS = Direct Metal Laser Sintering; 2 Based on Context Shipments report P - 50 Production System TM 1.7% Shop System TM Designed for Machine Shops Examples S - Max Pro • Metal Binder Jetting (MBJ) technology • Broad portfolio of print platforms across sizes, throughput, materials • Processes metal, sand and ceramics • Unique sintering and software simulation capabilities +250% Metal sales (hardware) trajectory 2 (% share) 4.3%
SSYS has been interacting with DM for 8 years and began reviewing its metal technology 2 years ago ⚫ 2015: SSYS was one of the first investors in DM, and Scott Crump, SSYS’s founder and Chief Innovation Officer, was a member of DM’s Board through 2018 ⚫ May 2017: SSYS announced a strategic partnership with DM ⚫ Jan 2021: SSYS and DM management met and conducted initial tech assessment ⚫ Feb 9, 2021: DM delivered to SSYS a preliminary indication of interest to combine with SSYS in a stock - for - stock transaction ⚫ Feb 19, 2021: Yoav Zeif, Ric Fulop, and Scott Crump met to discuss DM’s proposal, and to further discuss their respective businesses ⚫ Feb 2021: Due diligence conducted , after which Yoav Zeif met with Ric Fulop to convey the SSYS Board’s rejection of DM’s proposal 2022 ؘ May 2022: Met in person to discuss potential collaborations and conducted technology assessment between SSYS and DM ⚫ Sep – Nov 2022: SSYS and DM held discussions regarding a potential combination and undertook review of their respective businesses and products ⚫ Nov 7 – 9, 2022: SSYS and DM met to discuss potential combination and conducted technical diligence ⚫ Nov 2022 – Apr 2023: Ongoing management discussions and diligence meetings with respect to potential combination ⚫ Jan 9 – 12, 2023: Multi - day in - person meeting at DM HQ between technical leadership for in - depth technical diligence ⚫ Feb 8 – 9, 2023: Both management teams and select Board members met in - person at DM’s HQ to continue diligence sessions ⚫ Feb 22, 2023: DM management visited SSYS HQ to continue mutual diligence sessions and conduct technical review of SSYS’ products ⚫ Mar 5, 2023: DM delivered an indicative proposal to combine with SSYS in a stock - for - stock transaction ⚫ Apr 2023: Ric Fulop and Yoav Zeif continued to meet to discuss potential business combination ⚫ May 3 – 5, 2023: SSYS and DM negotiate key terms of potential combination ⚫ May 2023: Additional deep dive diligence conducted ⚫ May 9 – 11, 2023: Additional technical deep dive diligence meetings in person in DM HQ and Pittsburgh, Pennsylvania ⚫ May 18 – 19, 2023: SSYS and DM, along with select board members, met in - person at DM’s HQ to continue diligence and negotiation ⚫ May 25, 2023: SSYS and DM signed merger agreement 2023 2015 2017 2021 9
Key growth drivers Technology position Key technology P - 50 is the game - changing mass production metal binder jet system x A leader Metal Binder Jetting Metals Go - to - market improvement x Strong in large format elastomers DLP Industrial Photopolymer Unique collaboration with market leader (Align), further Go - To - Market and technological synergies x A leader (chairside and labs) DLP Dental Continued execution x A leader Binder Jetting Digital Castings DM has a solid business foundation DM has a leading position in ~70% of its business beyond metal 33% 35% 3% 29% Digital Castings Metals Dental Industrial Photopolymer $209M 2022 Revenue 10 ~70% Source: Management guidance
Fully complementary AM platform with minimal overlap PRIMARY USE CASES TECHNOLOGY TYPE Mass production ᴣ Binder Jetting Metal mass production Mass production ᴣ Sand Binder Jetting Mass production ᴣ DLP Dental Polymer mass production Mass production ᴣ DLP Large format Mass production ᴣ DLP Industrial Mass production ᴣ Powder Bed Fusion Manufacturing ᴣ FDM End - use low volume parts Manufacturing ᴣ Metal Extrusion Manufacturing ᴣ PolyJet Dental Prototyping ᴣ PolyJet Prototyping Prototyping ᴣ SL Prototyping ᴣ Digital Sheet Forming Manufacturing ᴣ DLP / rhCollagen - based Biomaterials Manufacturing ᴣ Bio plotter / Biomaterial portfolio Manufacturing ᴣ Extrusion Composite / Carbon fiber Manufacturing ᴣ Binder Jetting Wood 11 Polymer mass production Metal mass production Long Term 1 Source: Management, Wohlers Additive Manufacturing Report 2023, Context End Market and Materials Reports 2022, Voxel Matters; Mass Production = production series of 1,000 units+; Manufacturing = end parts, including manufacturing aids and tooling; Prototyping – pre - production modelling; Notes: 1 Management assessment
At the current valuations, DM’s acquisitions are attractive ~$0.6 ~$0.3 DM cumulative spending on acquisitions All of DM (organic and acquisitions) DM has made ~$1.1B of investments (cash and stock) to acquire several targets; SSYS merger with DM implies ~$0.6B value for entire DM business Others TOTAL PURCHASE PRICE ($B) SSYS had explored several of DM’s acquisitions in the past Note: 1 DM unaffected equity value as of 05/24/2023; Assumes 349M shares for DM; 2 Reflects pro forma growth net of the effects of the changes in accounting policies in 2022 and the termination to the product offering by DM in 2022 KEY ACQUISITIONS 2021 annualized 2022 2022 2021 annualized 36% Digital Castings Dental ~$1.1 ~$0.6 1 24% 2 12
COMBINATION SIGNIFICANTLY ENHANCES DENTAL OFFERING: The DM combination together with our Covestro material roadmap will accelerate penetration into high - growth dental vertical Dental is one of the highest growing verticals in AM with expected 2022 - 2027 CAGR of 30% DM’s chairside solutions doubles our Dental TAM , and facilitates our penetration with AM into the $30B crown and bridges market DM’s Chairside printing will double our Dental TAM By incorporating DM's broad resin portfolio, which offers appealing Gross Margin (and supported by robust IP), we will enhance SSYS’ Gross Margin and generate additional recurring revenues DM’s materials will increase Gross Margin and recurring revenues combined with SSYS’ Covestro material roadmap Centralization into one Dental group will enable cross - selling to combined installed base and cost efficiencies (SG&A, R&D) Dental synergies and efficiencies 13 Source: iData Research, Global Market Report Suite for Dental Prosthetics, 2022, CONTEXT Q1’23 report, and SSYS estimates
Customers and partners are excited about new opportunities in AM 14 “ As a long term customer of Stratasys and more recently Desktop Metal, we are very excited about the possibility of what this merger will bring to change the game in the additive manufacturing industry and increase it’s impact on end use printed parts in aerospace” – Blake Scholl, CEO, Boom Supersonic “ We have been using the Desktop Metal binder jet systems for in medical applications and are looking forward to all the benefits the merger with Stratasys will bring to the growth of our industry ” – Shri Shetty, CEO, Zeda “ This is a fantastic combination. We look forward to growing our partnership. This merger will be great for expanding the adoption of AM in production application ” – Adam Hopkins, CEO, Uniformity Labs “ Siemens is using DM as well as Stratasys systems for inhouse parts. We are looking forward to support as well as your combined journey towards the future of AM ” – Karsten Heuser, VP, Additive Manufacturing Siemens “ Very exciting and definitely a great move to drive adoption of AM for industrial use cases ….As largest independent full portio provider of AM Materials and Solutions, you are our perfect partner! ” – Martin Black, BASF AM “ The combination of DM and Stratasys can bring together not only a vast talent pool and advanced technologies, but the also the critical support services … that will benefit our labs, our customers and their patients ” – Laura Kelly, CEO, Modern / Microdental USA, Canada “ This partnership offers an expanded product portfolio, enhanced workflow efficiency, improved material selection, unparalleled support and training, and a commitment to future innovations ” – Rita Acquafredda, President, Global Dental Lab & Prosthetic Solutions “ Overall, we are excited and supportive of this acquisition and see an opportunity to continue our growth and more fully serve the market. ” – Ken Coburn, CEO, GoEngineer
$727 $843 $978 $284 $342 $407 $20 $40 $49 $1,031 $1,225 $1,434 2024E 2025E 2026E $791 $919 $1,061 $305 $390 $530 $25 $50 $61 $1,121 $1,359 $1,651 2024E 2025E 2026E Creating an at - scale growth AM company 15 + BASE CASE ($M) DOWNSIDE CASE ($M) • 1 year delay in dental and mass production metal roadmap • 100% of synergies 14% 1 12% 1 • Prolonged delay in mass production metal roadmap • Dental CAGR 1 reduced by more than half • 80% of synergies Street guidance 2 : $1.1B+ SSYS STANDALONE DM STANDALONE REVENUE SYNERGIES REVENUES : Source: SSYS Management; Note: SSYS adjusted for MakerBot; 1 2022A – 2026E SSYS standalone revenue CAGR; 2 Reflects May 25, 2023 guidance
High profitability across growth scenarios 16 BASE CASE ($M) DOWNSIDE CASE ($M) $56 $78 $111 $14 $55 $91 $69 $132 $202 2024E 2025E 2026E $91 $120 $157 $37 $99 $180 $127 $219 $337 2024E 2025E 2026E SSYS STANDALONE DM STANDALONE + SYNERGIES EBITDA: 20% 16% 11% Pro forma margin 14% 11% 7% + Street guidance 1 : 10% - 12% Additional annual cost synergies of $10M - $20M; likely to take more costs out under a downside case Source: SSYS Management; 1 Reflects May 25, 2023 guidance
DM has realized 75% of its $100M cost savings plan 17 QUARTERLY SPEND, $M TOTAL ANNUALIZED SAVINGS, $M $52 $35 $29 $20 $18 $17 OPEX Q1’23 (Actual) $53 Q1’22 (Actual) Q4’23 (Planned) $72 Non product COGS $47 $75 $100 Q4’23 (Planned) Q1’23 (Actual) Q1’22 (Actual) DM has already captured $75M of its planned $100M annualized cost savings, which enables generation of positive operating cash flow in the 12 months following the combination Source: SSYS Management
In addition to DM’s $100M cost savings plan, significant run - rate synergies expected across the business ANNUAL RUN - RATE COST SYNERGIES 1 COGS Leverage scale to optimize manufacturing costs Corporate Costs and Other G&A Elimination of duplicative public company costs Other Opex Synergies Technology and infrastructure optimization $50M RUN - RATE COST SYNERGIES Design, Research and pre - production ANNUAL RUN - RATE REVENUE SYNERGIES 1 Manufacturing and mass production Broad and complementary products and services, enabling broader distribution and enhanced market access $50M RUN - RATE REVENUE SYNERGIES ADDITIONAL ANNUAL COST - SYNERGIES OF $10M - $20M 18 1 Based on management estimates. Run - rate synergies expected to be fully realized by CY 2025E
COMBINED COMPANY GROSS MARGIN OVERVIEW 2026E Gross Margin to be ~50% 1 48% 44% 47% 50% Initiatives ᴣ Completion of DM standalone cost - out plan ᴣ ᴣ Integration of DM’s acquisitions ᴣ ᴣ Consolidation of production sites ᴣ ᴣ Reduction of raw material costs due to scale ᴣ ᴣ Network optimization, move to global carriers, and better sea/air mix ᴣ ᴣ Optimization of indirect labor ᴣ ᴣ Improving product mix ᴣ ᴣ Scale efficiencies of manufacturing and customer support ᴣ ᴣ Optimization of production processes 2 ᴣ ᴣ Vendor optimization ᴣ ᴣ Quality improvements, insurance optimization ᴣ = year of execution PF 2023 2024 2025 2026 19 1 Reflects Base Case scenario; 2 Example includes internalizing liquid resin production
Combined company will be led by SSYS management EITAN ZAMIR CFO Stratasys DR. YOAV ZEIF CEO Stratasys CFO Combined Company CEO and Director Combined Company 20
Agenda Desktop Metal is highly complementary and creates significant value Assessing 3D Systems proposal 1 21 2 Desktop Metal is a superior combination to 3D Systems 3
Offer does not address relative market valuation discount, despite risk to DDD’s growth outlook 2 3 While DDD provides scale and significant cost synergies in the near - term, it lacks critical metal technology to be successful in mass production AM 22 DDD proposal undervalues Stratasys 1 DDD submitted an offer to acquire Stratasys on May 30, 2023 $7.50 cash + 1.2507x DDD stock for every SSYS stock Stratasys shareholders to receive ~40% pro forma ownership SSYS Board has unanimously rejected 3D Systems proposal
12.0x 11.0x 10.0x 9.0x 8.0x 7.0x 6.0x 5.0x 4.0x 3.0x 2.0x 1.0x 0.0x Jan - 21 Feb - 21 Apr - 21 Jun - 21 Aug - 21 Oct - 21 Nov - 21 Jan - 22 Mar - 22 May - 22 Jul - 22 Aug - 22 Oct - 22 Dec - 22 Feb - 23 Apr - 23 May - 23 DDD’s past opportunistic offers have failed to address the relative market valuation discount 23 1.8x 1.0x 1/16/21 3/10/21 11/24/21 3/22/23 5/3 0/23 DDD LOI : 5/30/23 3 3/22/23 11/24/21 3/10/21 1/16/21 40% 31% 37% 45% 42% SSYS % ownership $7.50 $9.80 $10.00 – – Cash per share 58% / 42% 47% / 53% 73% / 27% 100% / 0% 100% / 0% Stock / cash mix 6 20% 4 32% 2 30% 65% 37% % premium 1 - day $12.82 $12.89 $19.37 $16.99 $17.92 - 3.2x - 3.6x - 0.8x - 1.4x - 2.9x FV / NTM REVENUE MULTIPLES OF SSYS AND DDD Trading revenue multiple differential (SSYS multiple less DDD multiple) 1 8/22/2022 Mutual NDA signed between SSYS and DDD - 1.0x - 0.7x 10/1/2022 Chairman of SSYS reached out to Chairman of DDD to discuss deal structure and DDD declined Source: Company filings, Stratasys Management and FactSet; 1 Reflects difference between DDD trading FV / NTM Revenue multiple at the time of offer and the implied SSYS offer FV / NTM Revenue multiple; 2 Based on SSYS price as of 03/09/2023; 3 Based on unaffected multiple for DDD as of 06/01/2023; 4 Based on unaffected SSYS price as of 05/24/23; 5 Implied offer price at DDD unaffected price as of 06/01/2023; 6 At the time of the offer Implied offer price today 5
SSYS is undervalued while DDD trades at a full valuation Rating Prem. to unaffected 1 Current Target price Rating date Broker BUY 28% $19.00 06/02/2023 Needham BUY 34% $20.00 06/01/2023 Credit Suisse BUY 48% $22.00 05/25/2023 Craig - Hallum BUY 41% $21.00 05/25/2023 Lake Street HOLD - - 05/25/2023 William Blair BUY 28% $19.00 05/23/2023 Berenberg HOLD 1% $15.00 05/19/2023 Loop Capital BUY 34% $20.00 05/17/2023 Oppenheimer 34% $20.00 Median DDD’s offer implies 1 : $17.92 Rating Prem. to unaffected 1 Current Target price Rating date Broker HOLD 8% $9.00 05/23/2023 Berenberg HOLD - - 05/11/2023 William Blair HOLD 8% $9.00 05/12/2023 Loop Capital HOLD - - 05/10/2023 Needham SELL (16%) $7.00 05/09/2023 Credit Suisse BUY 44% $12.00 05/09/2023 Lake Street 8.0% $9.00 Median $8.33 Unaffected 1 : Source: FactSet; Note: Analysis based on available broker reports before DDD proposal was made public; 1 Unaffected share price for SSYS as of 05/24/2023 of $14.88 and for DDD as of 06/01/2023 of $8.33 24
Unpacking DDD’s Healthcare business Commentary Revenue outlook DDD market position Heavy exposure to recession sensitive consumer spend DLP technology may disrupt DDD’s SLA dental business over long term 3 ear term: 2 id term: ng term: ? $261M N Dental 1 Strong M Lo x Well positioned to succeed Medical Strong 2022A revenue 25 Source: Company filings, Management assessment; 1 Assumes similar split between medical and dental revenue. Per 10 - K one dental customer accounts for >20% of revenue; 2 DDD management expects dental revenue to decline ~35% this year per filings and rebound in later years; 3 DLP share of aligners is increasing: based on iData research, DLP accounted for 13.9% of the 3D aligner market in 2020 and grew to 22.1% in 2022. This is mostly driven by DLP’s advantageous throughput, accuracy improvements, and the availability of low - cost solutions
Unpacking DDD’s Industrial business $277M Metal 1 DDD market position Revenue outlook Commentary Weak Lacks technology needed to succeed in metal mass production Weak DDD’s SLS technology not competitive in mass production vis - à - vis HSS technology Strong in SLA and MJP jewelry x Well positioned to succeed in low volume end parts 2022A revenue SLS 1 Other industrial 26 Source: Company filings, Context End Market Report; Management Assessment; Extrapolation of context triple B filing data and company information for Metal and SLS; 1 Based on sum of Hardware and Materials sales based on Context Shipment and Materials Report; 2 Context Shipment Report implies DDD’s business is losing market share 2 2
Metal SLS Dental Medical Other industrial There is risk to DDD’s 2023 guidance, creating significant risk for the value of stock portion of the offer… 27 $538M 2022A revenue 2023 guidance as of May 23 DDD 2023E REVENUE GUIDANCE EVOLUTION OF DDD’S 2022 REVENUE GUIDANCE $570 $580 $530 $535 $630 $625 $570 $545 $538 Feb 22 May 22 Aug 22 FY’22 guidance as of Nov 22 FY’22A DDD missed FY’22 mid - point guidance provided at Q1’22 by ~(11%) Outlook Midpoint guidance 1 of $560M $545 - $575M Note: 1 2023 revenue guidance (Q1’23)
… DDD’s repeated misses vis - à - vis Street expectations has been a concern 28 BEATING CONSENSUS EPS Adjusted EBITDA Revenue EPS Adjusted EBITDA Revenue Fiscal quarters (FYE 12/31) x x X (4%) X (18%) N/A X (5%) 2Q20 x x x x N/A x 3Q20 x x x X (18%) X (5%) x 4Q20 x x x x x x 1Q21 x x x x x x 2Q21 x x x x x x 3Q21 x x x x x x 4Q21 x x x X (1,100%) X (70%) x 1Q22 x x x X (600%) X (137%) X (3%) 2Q22 x x - x x X (1%) 3Q22 x x x x X (5%) X (1%) 4Q22 x x x X (29%) X (236%) X (5%) 1Q23 12/12 12/12 10/12 7/12 5/12 7/12 Quarters beat Source: FactSet, Company filings
DDD transaction aims at scale 29 2023E MIDPOINT OF REVENUE GUIDANCE $ 1.2B $0.2B $0.1B $0.1B $0.7B $0.6B Pro forma revenue Source: Management guidance, Company filings Note: Total may not add up due to rounding
Highest expected growth technologies FDM / FFF PolyJet / Inkjet SLA DLP Bioprinting DMLS SLS SAF 30 Potentially creates cost synergies of $70M – 100M Expected to have potential revenue dis - synergies of up to $50M Significant overlap creates cost save opportunities as well as potential dis - synergies Source: Management guidance, Company filings
$M Pro forma revenue estimate 31 + $791 $919 $1,061 $978 $596 $668 $668 ($50) ($50) ($50) ($70) $1,336 $1,500 $1,678 $1,576 2024E 2025E 2026E Base case 2026E Downside case SSYS STANDALONE DDD STANDALONE REVENUE DIS - SYNERGIES REVENUES: Source: SSYS Management, Research reports; Note: Adjusted for MakerBot transaction; DDD combination assumes run - rate synergies achieved in 2025E; 2026E run - rate cost synergies grown with respective pro forma revenue growth; 1 2022A – 2026E SSYS standalone revenue CAGR; 2 2024E revenue based on Street consensus; 3 2025E revenue growth based on an available research report and 2026E revenue assumes same growth as 2025E 2 $631 3 3 COMPARISON OF DDD SCENARIOS Commentary Downside Base Street Consensus 2, 3 Street Consensus 2, 3 Standalone High revenue leakage due to likely longer time to close $70M $50M Revenue dis - synergies Lower as each company recently executed standalone cost saves $60M $85M Cost synergies 14% 1
$91 $120 $157 $111 $34 $102 $127 $89 $124 $222 $283 $200 2024E 2025E 2026E Base case 2026E Downside case Pro forma EBITDA 32 $M Margin 9% 15% 17% 13% SSYS STANDALONE DDD STANDALONE + SYNERGIES EBITDA: Source: SSYS Management, Research reports; DDD Base and Downside standalone 2024E EBITDA margin based on Street consensus and 2025E EBITDA margin based on an available research report and assumed 2026E margin to have same expansion as SSYS 2025E to 2026E margin; DDD Downside case includes $70M revenue dis - synergies and $60M cost synergies; DDD combination assumes run - rate synergies achieved in 2025E; 2026E run - rate cost synergies grown with respective pro forma revenue growth +
Agenda Desktop Metal is highly complementary and creates significant value Assessing 3D Systems proposal 1 2 Desktop Metal is a superior combination to 3D Systems 3 33
DM offers superior value creation relative to DDD’s proposal. DM offers a natural and highly compelling next step to SSYS journey: DM merger creates more attractive business mix with robust manufacturing - based portfolio and superior metal offerings 1 2 DM offers higher growth as well as profitability relative to a combination with DDD 3 DM creates higher value for SSYS shareholders relative to current DDD offer 34
A merger with DM creates a more attractive business mix with greater exposure to mass production and manufacturing 35 Low volume mass production High volume mass production Prototyping + Prototyping 1 + 2022A PRO FORMA BUSINESS MIX COMPARISON BY REVENUE Low volume mass production Prototyping 49% Leading technology and positions in a broad set of materials More concentrated technology and position leadership High volume mass production Source: Company estimates; VoxelMatters Additive Manufacturing report, 2022 Note: 1 Assuming mass production represents less than two - thirds of DDD’s total business, supported by Troy Jensen’s (Lake Street) assessment that 40 - 50% of DDD’s sales are to manufacturing applications (interview on Printing Money podcast)
DMP FLEX / FACTORY PLATFORM (DMLS technology) P - 50 PRODUCTION SYSTEM TM (SPJ technology) Positioned for niche market applications x 10X higher cost, mainly driven by very low throughput at 0.05 liter/hour x 80%+ lower cost versus DMLS x High throughput at 12 liter/hour (e.g., 100X throughput P - 50 versus DMLS) and S - Max Pro with 145 liter/hour x Low - cost powders Low cost per part x No sand or ceramics processing x Otherwise wide range of alloys x DM offers ~40 materials (and growing), including reactive alloys, ceramics and sand High variety of materials x Geometries limited by support structure x Highly complex parts including internal cavities enabled by absence of support structure Ability to cover large variety of geometries x Known accuracy issues are mitigated by own software offering x Unique Software offering to deliver manufacturing accuracy x Only AM dedicated sintering simulation tool and hardware End to end manufacturing workflow x Full solution including service x Full solution including service x Enthusiastic customer feedback for DM offering Consistency and reliability DM addresses wide range of metal mass manufacturing applications; 3D Systems offers niche metal solution Comparison of key capabilities Positioned for mass manufacturing 36
DM has more comprehensive and superior metal offering METAL SALES TRAJECTORY COMPARISON 1 DM PORTFOLIO (2022 REVENUE) Market Share DDD PORTFOLIO 1 (2022 REVENUE) 2.7% 4.3% 4.3% 1.7% DM provides more complete and comprehensive metal offerings 2018 2022 2018 2022 (14%) DM’s metal portfolio is gaining significant traction as compared to DDD 37 +250% Metal Digital castings Photopolymers Metal Other DM has higher metal revenues with significant growth Source: Company estimates; 1 Based on Context Shipments report and Context Materials report
Significant technology overlap with 3D Systems could potentially lead to revenue dis - synergies Significant overlap Fully complementary 38 Highest expected growth technologies SLA PolyJet / Inkjet FDM / FFF DLP Bioprinting DMLS SLS SAF Bioprinting Sintering Wood Binder Jetting MBJ Metal Sheet Forming DLP Dental SLA FDM PolyJet DLP industrial SAF Source: Management guidance, Company filings
DM’s innovative portfolio and strong IP across applications stands out relative to DDD’s aging IP portfolio DM’S YOUNG PATENT PORTFOLIO IS MANUFACTURING FOCUSED DM CONTINUES TO DEVELOP INNOVATIVE TECHNOLOGIES Newest filings Active patents Me s s 39 Expires before 2033 Expires in 2033+ Breakthrough developments (examples) Core technology ~2,400 ~1,700 ~1,000 P - 50: High throughput production machine MBJ Cost reduction and resolution improvement with inorganic binders Binders 40% Furnace 2: Innovative sintering furnace Furnace 60% Lightbar: Large format DLP DLP 60% 37% LiveSinter: Strong tool to improve accuracy Software 40% 63% Next level toughness (Photo PIPS), expandable photopolymer foams (FreeFoam), dentures material (Flexcera) Materials AF, Polyjet, FDM, S materials nting utomation, Biopri and Casting ting, A n, gy tal AM, binder jet oftware simulatio intering technolo Source: Management guidance, Company filings
$157 $111 $337 $202 $283 $200 Combination with DM provides SSYS with financial profile that is superior to combination with DDD 40 ’22A – ’26E REVENUE CAGR 2026E EBITDA ($M) 14% 12% 19% 14% 10% Base Downside 2026E EBITDA MARGIN Base Downside Base Downside 15% 11% 20% 14% 17% Source: Management guidance, Company filings, Research reports; Note: SSYS adjusted for MakerBot; Figures include impact of cost synergies and revenue synergies / dis - synergies; 1 DDD’s Base case 2024E revenue is based on Street consensus, 2025E revenue growth based on an available research report and 2026E revenue assumes same growth as 2025E. Includes $50M revenue dis - synergies; 2 Downside case for DDD assumes same standalone financials as Base case and $70M revenue dis - synergies; 3 Base case DDD 2024E EBITDA margin is based on Street consensus and 2025E EBITDA margin based on an available research report and assumed 2026E margin to have same expansion as SSYS 2025E to 2026E margin; 4 DDD Downside case assumes same standalone financials as Base case. Includes $70M revenue dis - synergies and $60M cost - synergies SSYS STANDALONE DM + SSYS DDD + SSYS 1 2 8% 3 13% 4 1, 3 2, 4
Merger with DM provides greater ownership by SSYS in a combined company with better growth and profitability 41 ~63% SSYS ownership 1 ~40% SSYS ownership $80 $137 $211 $127 $48 $82 $126 $76 $127 $219 $337 $202 2024E 2025E 2026E Base case 2026E Downside case $50 $89 $113 $80 $74 $133 $170 $120 $124 $222 $283 $200 2024E 2025E 2026E Base case 2026E Downside case SSYS share in PF company DM share in PF company DDD share in PF company Source: SSYS management, Research reports Note: DDD Base case 2024E and 2025E EBITDA margins based on consensus and assumed 2026E margin to have same expansion as SSYS 2025E to 2026E margin. DDD Downside case financials same as Base case. Assumes $70M run rate revenue dis synergies and $60M run rate cost synergies. Assumes run - rate synergies achieved in 2025E; 2026E run rate cost synergies grown with respective pro forma revenue growth; 1 Based on net share settled method for convertible debt EBITDA ($M) PF OWNERSHIP
Source: Company filings, Stratasys Management and FactSet 1 3D Systems unaffected equity value as of 06/01/2023; 136M shares for DDD; 2 SSYS unaffected equity value as of 05/24/2023; Assumes 73M fully diluted shares for Stratasys; 3 Including $544M cash consideration paid to Stratasys shareholders, $33M Desktop Metal termination fee, $50M illustrative transaction costs, and $50M illustrative integration costs; 4 DM unaffected equity value as of 05/24/2023; Assumes 349M shares for DM; 5 Assumes $50M illustrative transaction costs and $20M illustrative integration costs; 6 Includes ~$85M in cost synergies and ~($25)M in EBITDA impact of revenue dis - synergies; Illustrative 15x capitalization multiple on ~$60M in net synergies; 7 Based on net share settled method for convertible debt; 8 Based on illustrative multiple expansion of 20x FV / 24E EBITDA and Base case forecast; 9 Illustrative 15x capitalization multiple on ~$78M in synergies; 10 Based on Base case EBITDA On a relative basis DM merger creates higher value to Stratasys shareholders 42 A combination with DM deserves a higher multiple due to a superior growth profile driven by metal manufacturing $1.0 $1.1 $1.1 $1.3 $0.4 $0.7 $1.5 $2.4 $1.5 Stratasys PF Equity Net cash³ Revenue dis - Net cost DDD equity² SSYS equity¹ shareholders synergies synergies 40% 60% ~$13.5 Stock per share ~$7.5 Cash per share $1.8 $1.1 $0.6 $0.7 $0.4 $1.0 $2.8 $2.2 SSYS equity¹ DM equity⁴ Net cost synergies⁵ Revenue synergies PF Equity Illustrative multiple expansion VALUE CREATION ANALYSIS ($B) 37% 7 63% 7 ~$24 per share FV / 24E EBITDA ~$6 per share 8 + + ~$30 per share 10 ~$21 per share 20x 8 18x 15x 9 15x 9 N.M. 13x 15x 15x 15x 6 15x 6 66x 13x
2.9x 2.7x 1.9x 1.7x 1.7x 37% 15% 9% 10% 4% Potential to achieve additional upside from multiple re - rate due to business mix shift 43 19% 10% SSYS + DM SSYS + DDD 2022A - 2026E PRO FORMA REVENUE CAGR 1 3D PRINTING TRADING MULTIPLES – 2023E FV / REVENUE AND GROWTH 3 2 2023E - 2024E Street % revenue growth SSYS + DM combination deserves a higher pro forma trading multiple Source: Stratasys management, Desktop Metal management; Factset as of 06/09/2023; DDD projections based on broker estimates; Assumes $337M in net cash and 73M diluted shares outstanding; 1 Adjusted for MakerBot; Reflects respective base cases; 2 Unaffected as of 05/24/2023; 3 Unaffected as of 06/01/2023
$225 ($316) Transaction with DM results in a stronger PF balance sheet 44 PRO FORMA NET CASH ($M) + + Pro forma leverage: ~6x 1 Source: SSYS Management, company filings Note: Stratasys / Desktop metal PF net cash includes $50M illustrative transaction costs; Stratasys / 3D Systems PF net cash includes $544M cash consideration paid to Stratasys shareholders, $33M Desktop Metal termination fee, and $50M transaction adjustments; Stratasys cash adjusted for acquisition of Covestro asset ($47M); 1 Based on PF 2023E EBITDA including $51M from SSYS and ($2M) from DDD
A transaction with DM is the most compelling option for SSYS shareholders given it creates the highest value vs. alternatives TOTAL VALUE TO SSYS SHAREHOLDERS ~$24 – $30 / SSYS Share ~$21 / SSYS Share $18 / SSYS Share 1 45 Note: 1 Subject to pro rata adjustment; 2 Closing could potentially be achieved by Q1 2024 if regulatory approvals are received sooner; 3 Timeline to closing is uncertain, highly dependent on a range of approvals including CFIUS, legal and regulatory approvals, which is likely to take significant time Q4 2023 Q3 / Q4 2024 2 Potential to extend tender offer 3 Partial tender offer Estimates illustrative timing to close
Exhibit (a)(14)
Internal communication. Not for redistribution.
Team Stratasys,
I continue to stand behind my promise of transparency and want to share some updates with you today.
First of all, I want to reconfirm our commitment to Desktop Metal and the pending transaction we announced. I continue to believe that Desktop Metal is the right partner for Stratasys to deliver the next phase of our North Star strategy and journey. The combination has the potential to deliver significant value to all Stratasys stakeholders: employees, customers, partners and shareholders. With Desktop Metal, we will be able to introduce exciting, additional growth opportunities, further advancing our goal to lead additive manufacturing into mass production. We are on track to close the transaction in the fourth quarter of 2023, subject to customary closing conditions, including the approval of our Stratasys shareholders and Desktop Metal’s stockholders, too. Until then, Stratasys and Desktop Metal remain separate companies, and we operate business as usual.
I would also like to share an update on the unsolicited non-binding indicative proposal from 3D Systems to acquire Stratasys. Our Board of Directors carefully reviewed and evaluated the proposal and, following consultation with its independent financial and legal advisors, unanimously determined that, under the terms of the merger agreement with Desktop Metal, it does not constitute a “Superior Proposal” to our pending combination with Desktop Metal.
And finally, I once again request that employees who are Stratasys shareholders NOT tender their shares and submit a Notice of Objection against Nano Dimension’s unsolicited partial tender offer. As employees, and shareholders, at Stratasys, you have a chance to make an impact, and your active participation is critical. Your shares are held through E*Trade, and you have received details on how to deliver your Notice of Objection from Human Resources. If you have any questions or need assistance in submitting your Notice of Objection, please reach out to Tamir Algranati, VP Global Compensation, Benefits, HR Operations and IL HR (Tamir.Algranati@stratasys.com) or your local Compensation and Benefits representative, as soon as possible.
Again, I want to emphasize that this announcement has no impact on our business or your day-to-day responsibilities as we continue to provide our customers with the same best-in-class 3D printing solutions that they have come to expect from us. We are at the end of Q2, and we should focus on achieving our numbers and delivering value to our customers.
Please keep up the hard work and as a reminder, if you receive any calls from outside parties, including members of the media, investors and analysts, please forward them to Yonah Lloyd at Yonah.Lloyd@stratasys.com.
As always, thank you for your dedication and commitment to Stratasys as we continue on our journey to 3D Print a Better Tomorrow. I hope you share my enthusiasm for the exciting growth opportunities ahead.
Yours,
Yoav
Forward-Looking Statements
This document contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the actual results of Stratasys Ltd. and its consolidated subsidiaries (“Stratasys”) may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements.
Such forward-looking statements include statements relating to the proposed transaction between Stratasys and Desktop Metal, Inc. (“Desktop Metal”), including statements regarding the benefits of the transaction and the anticipated timing of the transaction, and information regarding the businesses of Stratasys and Desktop Metal, including expectations regarding outlook and all underlying assumptions, Stratasys’ and Desktop Metal’s objectives, plans and strategies, information relating to operating trends in markets where Stratasys and Desktop Metal operate, statements that contain projections of results of operations or of financial condition and all other statements other than statements of historical fact that address activities, events or developments that Stratasys or Desktop Metal intends, expects, projects, believes or anticipates will or may occur in the future. Such statements are based on management’s beliefs and assumptions made based on information currently available to management. All statements in this communication, other than statements of historical fact, are forward-looking statements that may be identified by the use of the words “outlook,” “guidance,” “expects,” “believes,” “anticipates,” “should,” “estimates,” and similar expressions. These forward-looking statements involve known and unknown risks and uncertainties, which may cause Stratasys’ or Desktop Metal’s actual results and performance to be materially different from those expressed or implied in the forward-looking statements. Factors and risks that may impact future results and performance include, but are not limited to those factors and risks described in Item 3.D “Key Information - Risk Factors”, Item 4 “Information on the Company”, and Item 5 “Operating and Financial Review and Prospects” in Stratasys’ Annual Report on Form 20-F for the year ended December 31, 2022 and Part 1, Item 1A, “Risk Factors” in Desktop Metal’s Annual Report on Form 10-K for the year ended December 31, 2022, each filed with the Securities and Exchange Commission (the “SEC”), and in other filings by Stratasys and Desktop Metal with the SEC. These include, but are not limited to: factors relating to the partial tender offer commenced by Nano Dimension Ltd. (“Nano”), including actions taken by Nano in connection with the offer, actions taken by Stratasys or its shareholders in respect of the offer and the effects of the offer on Stratasys’ businesses, or other developments involving Nano, the ultimate outcome of the proposed transaction between Stratasys and Desktop Metal, including the possibility that Stratasys or Desktop Metal shareholders will reject the proposed transaction; the effect of the announcement of the proposed transaction on the ability of Stratasys and Desktop Metal to operate their respective businesses and retain and hire key personnel and to maintain favorable business relationships; the timing of the proposed transaction; the occurrence of any event, change or other circumstance that could give rise to the termination of the proposed transaction; the ability to satisfy closing conditions to the completion of the proposed transaction (including any necessary shareholder approvals); other risks related to the completion of the proposed transaction and actions related thereto; changes in demand for Stratasys’ or Desktop Metal’s products and services; global market, political and economic conditions, and in the countries in which Stratasys and Desktop Metal operate in particular; government regulations and approvals; the extent of growth of the 3D printing market generally; the global macro-economic environment, including headwinds caused by inflation, rising interest rates, unfavorable currency exchange rates and potential recessionary conditions; the impact of shifts in prices or margins of the products that Stratasys or Desktop Metal sells or services Stratasys or Desktop Metal provides, including due to a shift towards lower margin products or services; the potential adverse impact that recent global interruptions and delays involving freight carriers and other third parties may have on Stratasys’ or Desktop Metal’s supply chain and distribution network and consequently, Stratasys’ or Desktop Metal’s ability to successfully sell both existing and newly-launched 3D printing products; litigation and regulatory proceedings, including any proceedings that may be instituted against Stratasys or Desktop Metal related to the proposed transaction; impacts of rapid technological change in the additive manufacturing industry, which requires Stratasys and Desktop Metal to continue to develop new products and innovations to meet constantly evolving customer demands and which could adversely affect market adoption of Stratasys’ or Desktop Metal’s products; and disruptions of Stratasys’ or Desktop Metal’s information technology systems.
These risks, as well as other risks related to the proposed transaction, are included in the registration statement on Form F-4 and joint proxy statement/prospectus that has been filed with the Securities and Exchange Commission (“SEC”) in connection with the proposed transaction. While the list of factors presented here is, and the list of factors presented in the registration statement on Form F-4 are, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. For additional information about other factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to Stratasys’ and Desktop Metal’s respective periodic reports and other filings with the SEC, including the risk factors identified in Stratasys’ and Desktop Metal’s Annual Reports on Form 20-F and Form 10-K, respectively, and Stratasys’ Form 6-K reports that published its results for the quarter ended March 31, 2023, which it furnished to the SEC on May 16, 2023, and Desktop Metal’s most recent Quarterly Reports on Form 10-Q. The forward-looking statements included in this communication are made only as of the date hereof. Neither Stratasys nor Desktop Metal undertakes any obligation to update any forward-looking statements to reflect subsequent events or circumstances, except as required by law.
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No Offer or Solicitation
This communication is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, 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. No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
Important Additional Information
In connection with the proposed transaction, Stratasys filed with the SEC a registration statement on Form F-4 that includes a joint proxy statement of Stratasys and Desktop Metal and that also constitutes a prospectus of Stratasys. Each of Stratasys and Desktop Metal may also file other relevant documents with the SEC regarding the proposed transaction. This document is not a substitute for the joint proxy statement/prospectus or registration statement or any other document that Stratasys or Desktop Metal may file with the SEC. The registration statement has not yet become effective. After the registration statement is effective, the definitive joint proxy statement/prospectus will be mailed to shareholders of Stratasys and Desktop Metal. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of the registration statement and definitive joint proxy statement/prospectus and other documents containing important information about Stratasys, Desktop Metal and the proposed transaction, once such documents are filed with the SEC through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with, or furnished, to the SEC by Stratasys will be available free of charge on Stratasys’ website at https://investors.stratasys.com/sec-filings. Copies of the documents filed with the SEC by Desktop Metal will be available free of charge on Desktop Metal’s website at https://ir.desktopmetal.com/sec-filings/all-sec-filings.
This communication is not an offer to purchase or a solicitation of an offer to sell the ordinary shares of Stratasys. In response to a tender offer commenced by Nano, Stratasys has filed with the Securities and Exchange Commission a Solicitation/Recommendation Statement on Schedule 14D-9. STRATASYS SHAREHOLDERS ARE ADVISED TO READ STRATASYS’ SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WHEN THEY BECOME AVAILABLE BEFORE MAKING ANY DECISION WITH RESPECT TO ANY TENDER OFFER BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Stratasys shareholders may obtain a copy of the Solicitation/Recommendation Statement on Schedule 14D-9, as well as any other documents filed by Stratasys in connection with the tender offer by Nano or one of its affiliates, free of charge at the SEC’s website at www.sec.gov. In addition, investors and security holders may obtain free copies of these documents from Stratasys by directing a request to Stratasys Ltd., 1 Holtzman Street, Science Park, P.O. Box 2496, Rehovot 7612, Israel, Attn: Yonah Lloyd, VP Investor Relations, or by calling +972-74-745-4029.
Participants in the Solicitation
Stratasys, Desktop Metal and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about the directors and executive officers of Stratasys, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in Stratasys’ proxy statement for its 2022 Annual General Meeting of Shareholders, which was filed with the SEC on August 8, 2022, and Stratasys’ Annual Report on Form 20-F for the fiscal year ended December 31, 2022, which was filed with the SEC on March 3, 2023. Information about the directors and executive officers of Desktop Metal, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in Desktop Metal’s proxy statement for its 2023 Annual Meeting of Stockholders, which was filed with the SEC on April 25, 2023 and Desktop Metal’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on March 1, 2023. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC regarding the proposed transaction. Investors should read the joint proxy statement/prospectus carefully before making any voting or investment decisions. You may obtain free copies of these documents from Stratasys or Desktop Metal using the sources indicated above.
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Exhibit (a)(15)
SSYS DM Update / 3D Response Recorded Call Transcript
Operator
Hello and welcome to the Stratasys Investor Update Conference Call and Webcast. As a reminder, this conference is being recorded.
It’s now my pleasure to turn the call over to Yonah Lloyd, Chief Communications Officer and Vice President, Investor Relations. Yonah, please go ahead.
Yonah Lloyd – Stratasys Ltd. – Chief Communications Officer and Vice President of Investor Relations
Thank you.
We appreciate you joining us on short notice to hear updates on the exciting strategic and financial benefits of the Stratasys and Desktop Metal transaction and its superior value proposition.
Before we begin, I would like to call your attention to our legal disclaimers on slide two.
I am joined by Dr. Yoav Zeif, CEO of Stratasys, and Eitan Zamir, CFO of Stratasys.
Yoav will kick off today’s call by discussing the complementary nature of Desktop Metal to Stratasys, and its key growth drivers.
Eitan will then provide an updated overview of the combined company’s financial profile.
Yoav will then discuss the superior value proposition that Desktop Metal will deliver for shareholders.
Today we will cover a number of key slides and then review some of the top questions we’ve received over the last few weeks. Additional materials, including the full investor presentation and a more fulsome Q&A, have been posted to the investor section of the Stratasys website as well as on NextGenerationAM.com.
We look forward to discussing these materials with our shareholders in greater detail.
With that, I will turn the call over to Yoav. Yoav?
Yoav Zeif – Stratasys Ltd. – Chief Executive Officer
Thank you Yonah, and hello, everyone.
Stratasys is driven by one clear mission – to deliver shareholder value as the leader in additive manufacturing mass production.
When I started as Stratasys CEO, I shared with you my goal to begin this mission by regaining our robust leadership in polymers. We needed to improve the performance of our existing FDM and PolyJet offerings, as well as added three more technologies, DLP, Powder-Bed and Stereolithography, to give us the full-suite of polymer options for the market. We moved quickly to acquire and commercialize the necessary printer technologies, along with accompanying related materials.
And we did so in a disciplined fashion, with excellent results. By early 2022 we were well on the way to achieving this phase of our strategy, and today we are a leader across the polymer 3D printing landscape, having successfully integrated the acquisitions to deliver new, accretive revenues, as we continue to expand the use-case for our polymer business.
Once we achieved certain milestones on the polymer side, we knew that having a metal manufacturing solution was essential to achieve our strategy. Our customers and partners are very happy with the quality of our polymer solutions, as well as our top-notch service and support, and have inquired as to when we could also deliver metal solutions to them.
Following an extensive analysis of the metal landscape, we believe Desktop Metal has the best and most advanced technology for metal mass production.
And together, we have incredible potential for growth and innovation, by combining Desktop Metal’s complementary portfolio and track record of innovation, with Stratasys’ extensive market reach and operational excellence.
With its innovative portfolio and technology pipeline, Desktop Metal stands out amongst the other additive manufacturing players, with strong IP across applications.
And of course, this combination will have unmatched scale, creating the first more than $1 billion additive manufacturing company, with sufficient scale to lead the additive manufacturing industry into mass production.
It’s also financially compelling, with the potential to realize $50 million in cost synergies and an additional $50 million in revenue synergies. As a combined company, we expect to generate more than $300 million of EBITDA in 2026.
Eitan will get into the compelling financial benefits of the transaction, but I want to focus on the strategic value of this combination first.
And it’s quite clear.
2
We are combining Stratasys’ leading capabilities in polymer 3D printing, and the best operations and go to market strategy in additive manufacturing with Desktop Metal’s innovative leadership in mass production of metal, ceramics, sand-casting and restorative dental.
Together, we will create the first industrial additive manufacturing company covering the full manufacturing lifecycle from design to mass production in both polymers and metal.
The result is a powerhouse in mass production that is expected to be well-positioned to serve the evolving needs of customers.
But I’d like to take a step back and discuss how important metal is to Stratasys’ growth strategy.
Metal End Parts is the fastest growing application and will account for roughly 30% of the market by 2027, excluding service bureaus. This growth will be driven by Desktop Metal’s metal binder jetting, which offers high throughput and low cost per part – two keys to success in metal.
While other metal players can only address low volume manufacturing, Desktop Metal has low-cost powders and high throughput.
By adding Desktop Metal’s leading metal offering to our portfolio, Stratasys becomes a one-stop solution for metal and polymer AM and we expect to double our total addressable market for manufacturing by 2027.
In short, metal is key to our growth strategy to lead additive manufacturing, and Desktop Metal is the leader in the metal space.
The market opportunity is clear, but let me take a moment to go over a few of the reasons why we believe Desktop Metal’s technology is the right fit for Stratasys.
Successful metal mass production is best accelerated by a diversified product offering, advanced technology, geometric agility and a full scope solution.
With its Binder Jetting offering, Desktop Metal has been able to maintain more than 80% lower cost per part with a growing suite of over 40 materials to accelerate its sales in its metal portfolio by 250% over the past 5 years.
It’s also worth noting that Desktop Metal’s technology is extremely consistent and reliable – they have delivered a high degree of customer satisfaction time and time again.
Once fully commercial, we believe their offerings and extensive capabilities will drive continued growth.
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Essentially, Desktop Metal checks all the boxes and will help us accelerate our mission and our goal of enhancing shareholder value.
We’re confident in this because of our deep history with Desktop Metal.
The decision to combine with Desktop Metal came after observing how they grew their advanced technology over the past eight years.
We made an initial investment in 2015 and from then we have worked with Desktop Metal through a strategic partnership that we formed in 2017, where our channels sold their solutions.
Since 2021, we have looked closely at the company to understand the ways that our businesses could complement each other, and drive value for our shareholders. We conducted extensive analysis with technological experts and advisors, while reviewing their metals technology.
From there, we ultimately decided that Desktop Metal has the best and most advanced technology for metal mass production, making them the right partner for Stratasys.
But Desktop Metal is more than just metal – they have a strong and diversified portfolio with a leading position in approximately 70% of their business, beyond metal.
This includes dental and digital castings verticals, and premier technology in large format industrial photopolymer.
Their fully complementary portfolio provides minimal overlap and an attractive market penetration opportunity within additive manufacturing for the long-term.
Desktop Metal’s previous acquisitions, including exOne and EnvisionTec, provided the business with important technology, significantly enhancing its portfolio.
Desktop Metal invested $1.1 billion of cash and stock for these acquisitions. When coupled with the pending combination with Stratasys, the implied valuation of Desktop Metal businesses is approximately $600 million.
This makes their previous acquisitions quite attractive at current valuations. And in fact, at Stratasys, we had looked into several of the targets that Desktop Metal ultimately acquired.
Before I turn the call over to Eitan to dive into the financials, I want to share the overwhelming support we’ve received from our customers and partners since announcing the transaction.
4
We have heard from many of our top customers that bringing together Stratasys with Desktop Metal will help them to significantly advance their businesses as well as the additive manufacturing industry at large.
For example, Boom Supersonic, an exciting aerospace partner working on next generation supersonic commercial planes, shared that they believe this transaction will change the game in the additive manufacturing industry.
Our customers agree this transaction is a win-win for Stratasys and all of our stakeholders.
They clearly share our excitement about the opportunities that the combined company is expected to deliver.
And our partners share this sentiment as well. We’ve heard from many partners who have told us that the combination will help them to better serve client needs.
GoEngineer, the largest American partner, is excited and supportive of this transaction and sees an opportunity to continue its growth and more fully serve the market.
With that, I will turn it over to Eitan to discuss the pro forma financials. Eitan?
Eitan Zamir – Stratasys Ltd. – Chief Financial Officer
Thank you, Yoav.
We believe there is significant potential upside for Stratasys and Desktop Metal, as a larger, stronger combined company. Together, we can achieve more than either company can independently.
We see healthy revenues and attractive incremental revenue synergies that will enable us to achieve scale and accelerate our expected CAGR to 19% from 2022 to 2026 and deliver more than $1.6 billion of revenue in 2026.
This is significantly stronger as compared to the expected 14% CAGR for Stratasys as a standalone company.
Even in the downside case with a prolonged delay in our mass production metal roadmap, reduced dental CAGR and 80% realization of synergies, we will still achieve a stronger revenue CAGR as a combined company.
This transaction will increase our exposure to mass manufacturing, the fastest growing opportunity in our industry, reflecting the power inherent in combining our diversified businesses.
5
By 2026, in our base case, we also expect to more than double our profitability versus our standalone plan, delivering $337 million of EBITDA pro forma with an EBITDA margin of 20%, driven by $50 million in expected annual run-rate cost synergies.
Again, even in the downside case we will produce significantly more EBITDA than our standalone plan at a 14% margin by 2026.
The cost synergies I mentioned will be derived from a combination of corporate costs and other G&A, COGS and other opex synergies.
Importantly, the expected synergies are in addition to Desktop Metal’s $100 million annualized cost savings plan, of which $75 million has already been captured, enabling generation of positive operating cash flow in the 12 months following the close of the combination.
As we execute on numerous productivity and optimization initiatives following close, the gross margin of the combined company is expected to continue to increase and we expect to achieve an estimated 50% gross margin in 2026.
These initiatives include efficiencies in manufacturing and customer support and continued integration of Desktop Metal’s acquisitions, to name a few.
I will now turn the call back to Yoav.
Yoav Zeif – Stratasys Ltd. – Chief Executive Officer
Thank you, Eitan. I’d like to switch gears to discuss the Stratasys Board’s determination regarding the unsolicited proposal from 3D Systems.
In addition to releasing additional information on our pending combination with Desktop Metal, we also announced that, after careful review and consultation with its independent financial and legal advisors, the Stratasys Board has unanimously determined that the May 30, 2023 unsolicited non-binding indicative proposal from 3D Systems to acquire Stratasys does not constitute a “Superior Proposal” under the terms of our merger agreement with Desktop Metal.
The Board also determined that the proposal does not provide a basis upon which to enter into discussions with 3D Systems pursuant to the terms of the merger agreement.
The Board rejected the proposal for three primary reasons.
First, the Board believes that the proposal undervalues Stratasys.
Second, the Board doesn’t believe the offer addresses the relative market valuation discount between the companies, given growth hurdles for components of 3D Systems’ business.
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And finally, while 3D Systems provides scale and significant cost synergies in the near term, it lacks the metal technology, that I mentioned, is so critical to be successful in mass production additive manufacturing.
I would like to highlight 3D Systems’ healthcare business as an example of a potential risk.
While 3D Systems has demonstrated strength in the medical vertical, in dental, we believe heavy exposure to recession sensitive consumer spend and risk of disruption from DLP technology pose near-term risks, and make long-term performance uncertain.
By contrast, Desktop Metal’s restorative dental offering, will significantly enhance our portfolio and accelerate our penetration into the rapidly growing dental vertical, which comprises 35% of Desktop Metal’s business, and has an expected market CAGR of 30% from 2022 to 2027.
Together with Stratasys’ material roadmap from its recent acquisition of Covestro’s additive manufacturing business, Desktop Metal’s chairside and lab dental solutions expand Stratasys’ dental addressable market, including through penetration of the $30 billion crown and bridges market, enhancing gross margin, and generating additional recurring revenue.
Similarly, we see potential risk in certain parts of 3D Systems’ industrial business and technology.
Unlike Desktop Metal, 3D Systems lacks the metal technology that we have identified as a necessary growth driver in order to become a leading additive manufacturing company covering the full manufacturing lifecycle.
Their metal solution is niche as compared to Desktop Metal’s broad range of metal solutions for mass manufacturing.
Desktop Metal’s robust portfolio and superior offerings has led to higher metal revenue and significant growth over the past four years.
While Desktop Metal diversifies our offering, Stratasys’ portfolio has significant overlap with 3D Systems’ technological capabilities.
Although we believe a combination with 3D Systems would create cost synergies of between $70 million and $100 million, we also see potential revenue dis-synergies of up to $50 million given the overlap between our businesses. This presents a risk to growth.
As I said earlier, Stratasys carefully evaluated the market in deciding to pursue a transaction with Desktop Metal.
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Desktop Metal’s innovative portfolio and pipeline stands out among additive manufacturing players, with strong IP across applications and an innovation engine that is bolstered by strong ties to academia, including MIT.
Desktop Metal continues to develop breakthrough technologies to augment its young, manufacturing-focused portfolio, with recent significant developments across metal binder jetting, binders, furnace and software technologies, among others.
When comparing a potential transaction with 3D Systems versus our pending merger with Desktop Metal, the growth of the combined Stratasys and Desktop Metal reflects a stronger expected financial profile, with a base case top-line CAGR of 19% from 2022 to 2026, compared to 10% with 3D Systems.
We’d also note that the potential ownership structure of a Stratasys-Desktop Metal transaction generates greater potential profitability for our shareholders.
The Desktop Metal combination would give Stratasys shareholders a pro forma ownership of approximately 63% and is expected to generate $337 million of EBITDA in 2026 at base case.
3D Systems on the other hand would leave Stratasys shareholders with a pro forma ownership of approximately 40% and is expected to generate $283 million of EBITDA in 2026 at base case.
Finally, I’d point out that the higher CAGR of the combined Stratasys and Desktop Metal could enable a higher pro forma trading multiple as compared to 3D Systems.
As a result, our analysis indicates the combination with Desktop Metal could deliver value of approximately $30 per share to Stratasys shareholders, as opposed to approximately $21 per share under the 3D Systems proposal.
I’d like to close by reiterating our belief that Desktop Metal offers a superior value creation opportunity for Stratasys shareholders, employees, customers and partners relative to the 3D Systems proposal. We look forward to connecting later today and throughout the week to discuss our announcements in greater detail.
Yonah Lloyd – Stratasys Ltd. – Chief Communications Officer and Vice President of Investor Relations
Thanks, Yoav. We have been talking with shareholders over the last few weeks and we wanted to address key questions and themes we have received.
The first question is why is Stratasys expanding into metal additive manufacturing through the Desktop Metal transaction? What gives you the confidence that the transaction will exceed Stratasys’ standalone plan?
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Yoav Zeif – Stratasys Ltd. – Chief Executive Officer
This transaction is about bringing strong innovative assets together with the best execution in the industry. And we believe that as a combined company we will have greater opportunities for growth and success than we could achieve independently.
The combined company will have a broad product portfolio, and attractive positions across multiple additive manufacturing technologies and solutions.
Upon close, more than 50% of revenue is expected to be derived from mass production solutions, one of the fastest growing segments in additive manufacturing.
Stratasys and Desktop Metal also have a complementary IP portfolio, with more than 3,400 patents across printers, software, processes and materials, and across polymers and metal.
The opportunities for growth and value creation are significant and that is why we are so excited about this transaction.
Yonah Lloyd – Stratasys Ltd. – Chief Communications Officer and Vice President of Investor Relations
So why is now the right time for this Desktop Metal transaction?
Yoav Zeif – Stratasys Ltd. – Chief Executive Officer
Stratasys is well on its way to achieving the first phase of our strategy – to be the leader in polymer additive manufacturing mass production.
The next phase was to deliver a metal solution to complement our polymer technologies.
As an industry leader, our customers and partners expect us to expand into metal and this transaction is the most attractive way to do so.
Metal growth has been accelerated over the last year and is expected to grow even faster going forward.
The market is going through consolidation due to the macro environment and the need for scale. We looked for the best complementary portfolio to combine with.
We know Desktop Metal well and together we will create a next-generation additive manufacturing company with enhanced growth and profitability.
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Yonah Lloyd – Stratasys Ltd. – Chief Communications Officer and Vice President of Investor Relations
Why are you confident in the Desktop Metal transaction versus the other proposals the Board received?
Yoav Zeif – Stratasys Ltd. – Chief Executive Officer
I know this industry well and I’ve never been more excited about the future.
We are leaders in this industry and we have a responsibility to build the future of additive manufacturing.
With Desktop Metal, we will do exactly that. We will combine complementary product offerings, across verticals including aerospace, automotive, consumer products, healthcare and dental, as well as one of the largest and most experienced R&D teams, industry-leading go-to-market infrastructure and a robust balance sheet.
We’ve completed thousands of hours of due diligence and conducted extensive analysis of the metal landscape. Stratasys believes Desktop Metal has the best and most advanced metal technology for metal mass production.
We recognize that there is risk inherent in any transaction.
However, even in the Desktop Metal downside case, the transaction is superior to both our standalone plan and the 3D Systems proposal.
As a larger, stronger company, we will be better positioned to capture the many opportunities ahead.
Plus, we have a track record of achieving or exceeding market expectations and the Stratasys management team will be leading the combined company.
Yonah Lloyd – Stratasys Ltd. – Chief Communications Officer and Vice President of Investor Relations
Why did Stratasys’ Board of Directors determine that the 3D Systems proposal is not superior to the Desktop Metal combination?
Yoav Zeif – Stratasys Ltd. – Chief Executive Officer
The Stratasys Board carefully reviewed and consulted with its independent financial and legal advisors.
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The Board unanimously determined that the May 30, 2023 unsolicited non-binding indicative proposal from 3D Systems Corporation doesn’t constitute a “Superior Proposal.”
The Board also determined that it does not provide a basis upon which to enter into discussions with 3D Systems, pursuant to the terms of the merger agreement with Desktop Metal.
The Board believes that the 3D Systems proposal undervalues Stratasys, does not address relative valuation discount despite risk to 3D Systems’ growth outlook and lacks critical metal technology to be successful in mass production additive manufacturing.
Yonah Lloyd – Stratasys Ltd. – Chief Communications Officer and Vice President of Investor Relations
Why is the Desktop Metal transaction consideration all-stock?
Yoav Zeif – Stratasys Ltd. – Chief Executive Officer
The Board structured this deal because they are confident in the future of the combined company and the value we can create together.
The Board looked at this very carefully and determined that a stock-for-stock transaction is the best way to create the most value for both Stratasys and Desktop Metal shareholders.
We are creating a next-generation additive manufacturing company that will deliver industrial polymer, metal, sand and ceramic solutions from design to mass production.
Further, the structure of the transaction enables Stratasys to maintain a strong balance sheet and a healthy leverage profile, which we expect to be fortified by positive cash flow generation as a combined company in the twelve months following the transaction close.
Through this structure, shareholders of Stratasys and Desktop Metal will be able participate in the significant upside potential.
Yonah Lloyd – Stratasys Ltd. – Chief Communications Officer and Vice President of Investor Relations
Eitan, a question for you. What are the key opportunities for growth across the combined portfolio with Desktop Metal?
Eitan Zamir, CFO, Stratasys
The key opportunities for growth are metal mass production, dental, industrial photopolymers and significant technological synergies.
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The Desktop Metal combination creates an at-scale growth additive manufacturing company that is expected to generate more than $1.6 billion of revenue in 2026.
Together, we will also generate $337 million of EBITDA in 2026 at base case, for a 20% pro forma EBITDA margin.
This growth reflects a top-line compound annual growth rate of 19% from 2022 to 2026, compared to an estimated 14% CAGR for standalone Stratasys over the same period.
We are confident that by bringing these two great companies together, we will be able to accelerate the momentum already underway at Stratasys and deliver significant value for our shareholders, customers and employees.
I’ll turn it over to Yoav for some final comments.
Yoav Zeif – Stratasys Ltd. – Chief Executive Officer
Thanks, Eitan.
To summarize, we believe Desktop Metal will provide an opportunity for higher growth and profitability than a 3D Systems combination and ultimately will help the combined company deliver higher value for Stratasys shareholders.
The robust portfolio created by combining Stratasys and Desktop Metal, the innovative technology, the talented teams, paired with the ability to scale and the cost and revenue synergies, will position the combined company to lead the additive manufacturing industry into real mass production.
We are confident that the benefits of this opportunity will drive value for all of our stakeholders and create a powerhouse in additive manufacturing for many years to come.
Thank you all for joining and I hope to speak to you soon.
Operator
Thank you. That concludes today’s teleconference and webcast. We thank you for your participation and have a wonderful day.
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