In September of 2016, General Electric (GE) made headlines when it offered a total of $1.4 billion for two of the leading companies in the 3D printing industry, Arcam AB and SLM Solutions. Both of these two companies focus on metal 3D printing. The deal was not so easily completed, however, as Elliott Management, the activist hedge fund headed by billionaire Paul Singer, has resisted the takeover of SLM. In the latest news relating to the deal, Elliott has announced its intentions to reject an offer made by GE which was set to expire today.
Elliott's Investment in SLM
As an activist hedge fund, Elliott Management routinely purchases large blocks of shares in a variety of companies, thereby holding some sway over the company's business decisions. In the case of SLM, Elliott owns roughly 20% of all outstanding SLM shares. Elliott has pushed back against a GE takeover, voicing its opinion that a GE offer is likely not to be in the best interests of SLM stock owners.
Specifics of the GE Offer
GE has offered a 38% premium on SLM stock. The offer, which has stood since early September, includes EUR38 per share of SLM stock, placing the value of the German 3D printing company at about EUR683.3 million, or close to $800 million, at about 18 million shares outstanding in the market. In order for the offer to be completed and accepted, at least 75% of shares must be purchased.
In the face of the initial offering by GE, prices of shares of both SLM and Arcam stock rose. However, Arcam eventually denied the offer, and it is expected that SLM will as well, thanks in large part of Elliott's role in the negotiations.
Industry analysts speculate that GE made its initial offer for the two 3D printing companies as a sign that it intended to enter the upcoming industry. Both of the companies have seen this attention as a reflection of their growth and potential in a relatively new market. GE had clearly hoped to gain a massive stake in that market, which some analysts estimate could grow to $1 billion per year by 2020. Shareholders in the sector tended to agree as well, as reflected by the jump in price for these two stocks.
How Will GE Proceed?
GE has a few options going forward. It can revise its offer in an attempt to sway Elliott Management, it can extend the deadline of the offer without changing the other terms, or it can not change any aspect of the offer if it suspects that Elliott leaders are attempting to call GE's bluff. If a minority stake of shareholders have agreed to the deal, GE can also abandon the deal.