A few months ago, the Canadian fund Murchinson wanted to acquire Nano Dimenshine, which operates in the field of 3D printing, through a tender offer, but when it became clear that the chances were low, it turned in a different direction – it is now demanding that incumbent directors be removed and directors be appointed on its behalf. The prospect of a control struggle raises the stock by 4.8%.
Nano Dimenshine is a loss-making company, a failed company in the field of 3D printers, a company that managed to take advantage of the tide on Wall Street in 2020-2021 for chain issues that brought in 1.5 billion dollars. She was worth tens of millions of shekels on the Tel Aviv Stock Exchange, but when she was listed on Wall Street and listed her shares in Tel Aviv, her luck improved. A missing hand handled the stock, and the company, with marginal sales and losses, received a huge infusion of money.
What do we do with this money? having fun It will last for years, decades. Along the way they also buy companies, also companies of associates. There is a good chance that the investors themselves will not benefit from the cash in the coffers, although you never know. What is clear is that the market is not stupid – Nano is trading at $660 million, about 35% below cash, because investors understand that you cannot touch time, it will not reach them.
And that’s why active funds, in this case the Canadian fund comes into the picture. She understands that proactive actions can flood value to bring the company to cash value. Such moves can be welcome, only that many times they fail, after all there is a complicated legal battle here, and even when they succeed it takes a long time (usually).
Nano acquired activities in order to grow, and also acquired as a financial investment that could develop into a strategic investment a stake in the shares of the major Israeli competitor Stratasys. Nano does not have a controlling owner, it is a company that is actually controlled by its management and according to reports to the SEC it appears that the Canadian fund, along with investment entities related to it, owns 8% of the company’s shares
The fund reports that it has sent a letter to the company’s management with a demand for a shareholder meeting, which will vote on the fund’s proposal – the removal of CEO and chairman Yoav Stern, and directors Oded Gera, Yigal Rotem and Dr. Yoav Nissan Cohen. The fund wishes to appoint two candidates in their place – Kenneth Traub and Dr. Yehoshua Rosenzweig.
Nano is obviously not expected to agree. A legal battle will develop here, but it is worth repeating Nano’s response to the Canadian fund’s previous activist actions – “The company’s equity and cash make it a target for entities that wish to take it over, for their own business or personal needs. Their ways and their activities indicate that they plan to dissolve the company”. The truth is that if this were to happen it would be excellent – it would flood the shareholders with great value and too much value.
Meanwhile, the market does not believe that the fund will succeed. The stock is not excited by the letters. The stock seems depressed mainly because of the results. Nano managed to lose 140 million dollars in the first nine months on revenues of 31 million dollars. Revenues arrived through purchases. The loss also included write-offs, but even if one-time events and expenses are excluded, this is a rate of losses of close to 100 million dollars per year.
What did Nano find in Stratestis?
As mentioned, Nano purchased a stake in the major competitor, Stratasys (Nano purchased 12% in Stratasys). Nano paid 150 million dollars. Nano’s purchases began in April 21 last year, with the purchase of the DeepCube company in exchange for 70 million dollars.
As expected, Stratasys defended itself and activated a ‘poison pill’ – the mechanism is activated as soon as an external investor purchases shares of the company and crosses a certain set threshold, in this case – 15%. After that, automatically, a rights issue is activated for the existing controlling owners, which significantly dilutes the package of shares purchased by the “hostile party”. The pill works in this way: everyone can purchase shares at zero price, of only 1 cent, except for the one who took over in a hostile manner. Stratasys is trading today at a price of $19.8 and a market value of $1.3 billion. “The plan is designed to protect the long-term interests of the company and all of its shareholders, and to allow them to realize the potential of their investment,” Stratasys managers announced, “The mechanism is designed to reduce the likelihood that any entity will gain control or material influence over Stratasys through the purchase of shares on the open market , and this without paying the other shareholders for the control.”
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