Friday, September 21, 2012

3DFinance: What will the Stratasys (SSYS)-Objet merger mean?

Earlier this year it was announced that Stratasys (SSYS) is seeking to merge with Objet. Last week at a shareholders meeting that merger was approved by more than 99% of SSYS shareholders. This is a big step toward a successful merger that is set to take place over the rest of the year. When this first happened I thought that this meant that the stock would take off, but a few days into the week and it is obvious that this is not the case. There has been a large decline in the stock price.

This merger my be set for a rocky road ahead because it is close to 50-50, so it may be some time until the new company it stable and moving forward after adjusting to the new dynamic. Additionally, the new company no longer meets the requirements for inclusion in the S&P SmallCap 600 and has already been taken off which may be part of the reason for the decline. Still I think it would still be a good long-term investment for a number of reasons:

-Stratasys has been awarded the highest possible Composite Rating (99 of 99) by Investors Business Daily which measures "overall technical and fundamental strength".

-The new Stratasys will be the market leader in multiple types of printers, PolyJet, FDM, and SolidScape, and well ahead of most of the competition.

-Objet brings a very valuable segment to the company, namely multi-materials development. Objet prides itself in its 100+ products. As the 3D economy develops there is no guarantee about the returns on product designs, but the company that patents the materials will do well.

At the moment I think it best to wait until the stock bottoms out before investing more.

Disclosure: I have no positions in any of the stocks mentioned above. I am not a finance professional and before you blow away your savings on my advice consult real financial professionals.

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