Deals

Brooke Sutherland is a Bloomberg Gadfly columnist covering deals. She previously wrote an M&A column for Bloomberg News.

What GE wants, GE gets -- one way or another.

Less than 24 hours after abandoning its bid for German 3-D printing company SLM Solutions Group AG amid opposition from activist fund Elliott Management Corp., the industrial conglomerate had already settled on another German 3-D printing company to buy. General Electric Co. announced on Thursday that it will acquire a 75 percent stake in Concept Laser GmbH for $599 million, with an option to take full ownership later on. 

A New Dimension
GE is betting that 3-D additive manufacturing will help provide a boost to revenue amid slowing growth in the industrial economy.
Source: Bloomberg

Just like SLM, Concept Laser specializes in metal-based additive manufacturing and caters to the aerospace, health-care and automotive industries. The best part? Concept Laser is closely held, so there are no pesky activist shareholders to get in the way. 

GE isn't totally free of Elliott just yet. The activist shareholder owns a more than 10 percent stake in Arcam AB, a Swedish 3-D printing company that GE is also trying to acquire. Elliott hasn't said what its position is regarding this situation, but GE isn't taking any chances. On Thursday, it raised its bid for Arcam by about about 5 percent to 300 kronor a share, or about 6.2 billion kronor (about $690 million). The industrial company also lowered the minimum shareholder acceptance threshold on its offer to 75 percent.

Elliott's stake could still allow it to block a complete takeover of Arcam. Swedish takeover laws require more than 90 percent of investors to tender their shares for an acquirer to be able to squeeze out the remaining minority holders. GE has made clear that it's not going to boost its offer any further, but Elliott might be willing to hold onto its stake in the hopes of more upside down the road, a tactic it's successfully employed before with European targets.

The biggest loser in this 3-D printing saga is SLM -- and perhaps by association, Elliott. SLM management wanted the GE deal to go through because the company could really use the industrial giant's financial resources and marketing power to accelerate its development.

Just a few weeks ago, SLM's management and supervisory boards unanimously recommended GE's offer, contending that the price was fair because (among other things) it was significantly higher than what analysts thought the company could achieve on its own. Thanks to Elliott's rejection of GE's offer, SLM has been jilted for a new target. Unsurprisingly, its shares took a tumble on Thursday. 

Gee, Thanks Elliott
SLM Solutions shares plunged after GE walked away from a deal.
Source: Bloomberg
Intraday times are displayed in ET.

SLM CEO Markus Rechlin sounded rather woeful in the company's statement on the collapsed deal on Thursday:

"Being part of the GE Group would have given us the opportunity to accelerate on our growth track. GE had made serious and credible commitments to expand our locations and distribution network. In our view, a successful offer would not only have been in the interest of GE but also in the interest of our company, our employees and our shareholders." 

Another big industrial company could come along and try to buy SLM at a price more appealing to Elliott. Investors appear to be pricing in at least some possibility of a counterbidder because SLM is still trading slightly above where it was before GE showed up. No other suitors have emerged in the almost two months since GE announced its bid for SLM, but with the industrial giant out of the running perhaps they will feel more emboldened to step forward.

Otherwise, Elliott will have to hope it can find other ways to create value at a stand-alone SLM. The company said that its annual revenue and adjusted Ebitda targets can still be achieved, but cautioned that the takeover process had created uncertainty for customers and employees. Much is riding on SLM's results in the fourth quarter, when most of its machines are typically ordered, and the company should provide a third-quarter update next month.

GE, meantime, is moving forward on 3-D printing with its two deals -- and seemingly no regrets.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Brooke Sutherland in New York at bsutherland7@bloomberg.net

To contact the editor responsible for this story:
Beth Williams at bewilliams@bloomberg.net