Objet completes merger and $1.4b exit

Israeli 3D printer developer Objet and US rival Stratasys have now merged into a new Israeli company called Stratasys.

Last weekend it looked like Retalix Ltd. (Nasdaq: RTLX; TASE: RTLX) acquisition by NCR at a company value of $800 million was going to be the largest Israeli exit of 2012. However, this morning that deal was surpassed. Israeli 3D printer manufacturer Objet Ltd. and its US rival Stratasys Inc. (Nasdaq: SSYS) announced that their merger has been completed creating a company with a value of $3 billion that will be incorporated in Israel.

The two companies first announced the merger in April 2012. In a reverse merger, the shares of the privately held Israeli company were merged with the publicly traded US company to create a new company, defining itself as Israeli but which will continue to be called Stratasys. Under the terms of the merger, the public will own 55% of the merged company, and the Objet shareholders will own 45% on a fully diluted basis. The value of the merged company last April amounted to $1.4 billion and because Stratasys had a former value of $766 million, Objet we can conclude was worth $634 million.

Meanwhile, seven months have passed and the value of the two companies has risen sharply. The market cap of Stratasys during that period has doubled, both due to its own improved results and the results of the merged company, and it is now worth $1.6 billion. As the announcement today says that the new company has a value of $3 billion, this gives Objet a company value of $1.4 billion.

The closing value of the old Stratasys on Thursday will be the base for trading in the new share, and with the number of shares of the new company being almost doubled, the company value will rise by the same multiple. In this way, this complicated deal creates the largest Israeli exit of the year.

Objet CEO David Reis who becomes CEO of the new Stratasys told "Globes," This is an exceptional event in Israel's high tech world. It's a most abnormal event."

Stratasys founder and former CEO Scott Crump becomes chairman of the new company. Elhanan Jaglom, an Objet shareholder and former chairman becomes chairman of the new company's management committee. The new company, which to all intents and purposes will be an Israeli company, will operate from Minnesota and Rehovot.

Reis said that with the merger completed, the new company will operate on two levels: marketing and sales, and R&D. "The combined company has a broad portfolio of different printers of almost 20 kinds and we hope that this range will answer the needs of the two companies' customers.

He added that as a result of the merger marketing channels will be doubled. "In addition a large development body will be created that we hope can develop new products at more rapid rate than each company separately."

The new Stratasys will become the world's leading company in the field and will serve all those involved in design in every industry. "Our customers are shoe companies, medical companies, companies manufacturing defense equipment and more." Before the merger, combined annual revenue of the two companies was $277 million, Reis said.

Stratasys believes that within 18 months of the merger's completion, annual expenditure will be reduced by $7-8 million not including $3-4 million less in taxes. The new company expects revenue to grow by at least 20% annually, and non-GAAP operating profit of between 20% and 25%, and net profit of between 16% and 21%.

The new company will have 1,000 employees, and Reis insists there will be no layoffs. He said, "We are talking about two companies with rapid growth and we are hiring more employees all the time. Each quarter we hire dozens of employees."

Published by Globes [online], Israel business news - www.globes-online.com - on December 3, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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