Objet drops IPO, to merge with Stratasys

Mon Apr 16, 2012 1:17pm EDT

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(Reuters) - Israel's Objet Ltd dropped plans for an IPO and instead will merge with fellow 3D printer maker Stratasys Inc (SSYS.O) in a stock deal valuing the combined companies at about $1.4 billion.

The new concern, which will be 55 percent owned by Stratasys shareholders, will be headed by Objet CEO David Reis. Stratasys CEO Scott Crump will become full-time chairman.

Shares of Stratasys rose as much as 26 percent to $45.48 on the Nasdaq while those of rival 3D Systems Corp (DDD.N) rose 12 percent to $27.44, the highest for both stocks in nearly a year.

Objet filed with U.S. regulators on March 22 to raise up to $75 million in an initial public offering.

At the time, Objet was already in talks with Stratasys but wanted to keep its options open, Reis said in a telephone interview.

As of April 13, Stratasys had a market valuation of about $766 million.

Stratasys shareholders will receive one share of the combined company for each share they own.

The new company will operate under the name Stratasys Ltd and continue to trade on the Nasdaq under the ticker "SSYS."

"The combined marketing and sales capabilities will provide extensive geographic reach, which should help grow customer awareness of the many opportunities to employ 3D printing and rapid prototyping techniques," the companies said.

There will be very little overlap in products, Reis said.

Objet and Stratasys both make 3D printers, which are used to make prototypes of products or three-dimensional objects from a digital file and can be used to manufacture everything from phones to cars using a computer-controlled printer.

Stratasys counts Caterpillar Inc (CAT.N), Xerox Corp (XRX.N) and Honeywell International Inc (HON.N) among its customers while Objet serves Adidas, Intel Corp (INTC.O), 3M Co (MMM.N), and car makers such as Jaguar, Bentley and Mercedes.

Both companies sell to Apple Inc (AAPL.O), Autodesk Inc (ADSK.O) and Chrysler Group LLC FIA.MI.

In a separate statement, Stratasys said it had adopted a limited-duration shareholder rights agreement that would pay a dividend of one right to buy one common share of the company for each outstanding common share held.

The poison pill would kick in if anyone became the beneficial owner of, or planned to buy, 10 percent or more of Stratasys's common stock. This would block unsolicited bids while the companies closed their deal.

The companies said they expected the transaction to be completed in the third quarter of 2012 and add to per-share profit within 12 months.

Objet's revenue jumped 38 percent to $121.1 million in 2011, while net income rose 42 percent to $14.7 million, according to its IPO filing.

Stratasys also forecast first-quarter results ahead of analysts' estimates. It expects a profit of 27 cents to 29 cents per share, excluding items, versus a profit of 21 cents last year. It expects revenue to rise 31 percent from the year-ago period, to about $45 million.

Analysts expected an adjusted profit of 26 cents and revenue of $41.6 million, according to Thomson Reuters I/B/E/S.

(Reporting by Sayantani Ghosh in Bangalore; Editing by Supriya Kurane and Ted Kerr)

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