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Thanks for the thoughts cleos.
The one thing I disagree with is regarding selling on the open market vs tendering. There are 2 advantages to tendering as I see it.
First, a small one, but there is no commission when tendering if I understand correctly. The commission is high with some brokerage firms like fidelity with the adr's, so saves a few bucks to avoid.
Second, my understanding is that if somehow ge offers a higher offer in the next 6 months you get the increase retroactively if you tendered, not so if you sold on the open market. While ge said they won't increase, it seems worth it to me to tender to have that benefit just in case something changes in 5 months from now. Lastly, I really can't imagine ge pulling out because they get say 65% instead of 75%. They kept the option to lower the percentage again and while one never knows, I just don't see them walking away. If the pps was back up above tender I'd think differently, but as is seems more advantage to tender.
I'm still leaning towards tendering most and holding a little...
Thoughts on long term holding?
Still deciding what to do here with what I'm still holding, tendered about a third previously and sold a bit before that. I'm leaning towards tendering most and holding some, but feel I'm at the end of my knowledge base to understand how things could play out for those who don't tender, but will appreciate anyones further hashing out thoughts on possible scenarios.
I hear what Flying Trader is saying about them having no incentive to grow value and finding ways to screw Elliot, but on the flipside sooner or later GE is going to have to put in big orders it would seem and once that happens can they really keep the share price down? Say theoretically Elliot (and we) held for 5 years, wouldn't GE have purchased tons of bulk orders and the price be much higher than it is now? Maybe not if there is virtually no buying and selling?
Or maybe the share price drops and GE just holds off for a year on big purchases and ties up Elliots money until they accept another deal? And if Elliot accepted a new deal after 6 months from this one, what share price would GE have to buy us little fish out at, whatever the market price is? Maybe whatever they offer Elliot, maybe not?
A related question - anyone have thoughts on how soon GE needs a lot of machines?
Thanks for your thoughts
Great, thank you
Charlie can you please remind me the source of those percentage breakdowns? Thank you
It's true it could be best of both worlds perhaps. GE at 50% plus gives reliability and take risk out of stock longer term, and shorter term maybe a drop but once a few big orders come in soon how long will that last?
Might be an opportunity to tender part or all and then buy more at lower price for long haul if we end up with only majority ge ownership.
http://www.wsj.com/articles/ges-3-d-printing-buys-set-to-fail-after-activist-elliott-intervenes-1477047163?mod=yahoo_hs
GE announced plans to buy two European 3-D printing firms in early September.ENLARGE
GE announced plans to buy two European 3-D printing firms in early September. PHOTO: BLOOMBERG NEWS
By EYK HENNING
Oct. 21, 2016 6:52 a.m. ET
0 COMMENTS
General Electric Co.’s $1.4 billion move to buy two European 3-D printing firms looks set to fail after the U.S. conglomerate said it wouldn’t bow to pressure from one of the world’s best known activist investors.
GE said Friday it wouldn’t improve its offer for SLM Solutions Group AG, a German 3D-printing machine maker. The statement came just hours after two funds of Elliott Management Corp. said they had amassed more than a 20% stake in SLM and would reject GE’s bid saying the offer undervalued the company.
GE’s offer for SLM is dependent on 75% of shareholders tendering their shares, making Elliott refusal a formidable stumbling block that will likely upend the deal.
Elliott also said it had taken a 10.14% stake in Sweden’s Arcam AB, the other company GE recently proposed to buy, meaning GE won’t be able to meet the minimum acceptance threshold of at least 90% of shareholders agreeing to the deal. A spokesman for Elliott declined to comment on the fund’s plan regarding Arcam.
GE announced plans to buy both companies in early September to expand its ability to make aircraft components and other parts using so-called additive-manufacturing technology, or 3-D printing. Both European companies are leading names in the sector.
SLM makes laser machines that form metal components used in the aircraft and automobile industry.
Arcam, founded in 1996 and based near the city of Gothenburg, invented an electron beam melting machine used in the aerospace and orthopedic implant industry.
GE said the twin acquisitions would help it produce complex metal parts at lower weights and lower costs than traditional forged or cast parts.
“Eventually, companies here are going to hit escape velocity in terms of scale,” GE Chief Executive Jeff Immelt told investors on a conference call in September, referring to the makers of additive-manufacturing machines. “We want to be one of the companies that does that.”
Elliott’s opposition to the SLM deal came just ahead of Friday’s deadline for GE to potentially change its offer. Without the extension or change, the tender ends Monday.
It does seem like they were much more willing to paint an ugly picture with the commentary than previously.
What are others doing?
In case wasn't clear the bottom paragraph was a quote from the offer
A question. If GE does get 90% and a shareholder has not tendered then it would seem there is no downside as the shares will then be bought out at the same bid price as indicated below. The catch is the phrase "unless special cause dictates otherwise." I don't see explanation as to what = special cause, an important detail.
Any thoughts on where to get an answer or guesses as to what fits that category?
Purchase price and interest. After the issues of advance vesting of title to the minority shareholders’ shares and advance payment of the purchase price have been resolved, the proceedings continue with the exchange of submissions regarding the final amount of the purchase price and the calculation of interest. Where a public offer has been made to acquire all shares not already held by the majority shareholder and such an offer was accepted by holders of more than nine-tenths of the shares to which the offer relates, the purchase price for the remaining shares will be the equivalent of the value of the offer consideration, unless special cause otherwise dictates. If such a special cause applies, the purchase price shall as a general rule reflect the market value of the shares at the time of the initiation of the compulsory acquisition procedure. The minority shareholders are also entitled to interest on the purchase price.
And I think I'm gonna buy some ge... seems like they're moving in the right direction for a behemoth company. Others doing so?
That's great, thanks. If I can find time going to contact friend who ran a hedge fund to get more insight into the Elliot moves and the implications
With negotiating with the major shareholders do you understand if theybcan make different offers for different stock? For example, could they say to Elliot we'll pay you 50 pps for your shares and stick with the bid offer for us riffraff? My little skimming of the official offer stipulations made me think maybe but didn't have time to read it all carefully yet.
yeah I would bet ge and arcam knew where this was headed for a while, or maybe when magnus moved to u.s it was the time of working on the move towards merger. board and employees probably gets better deal somehow and they see that this will scale the tech in a way they never could on their own at least in any comparable timeframe.
how the bid plays out i don't know, but still at least seems like small downside and big upside potential. i think ge is making this buy no matter what essentially and other companies probably see that is my bet. but maybe the hedge funds and others can at least squeeze a higher price out for us before it's done. soon enough we'll know how this ends!
Hmm. Now it's getting interesting.
Not sure with the selling either. Sold some at 35 this am. Probably will also sell in pieces and hang on to some. Wouldn't mind owning some ge anyhow which it will convert to at some point. But seems like a pretty done deal with Oppenheimer getting out. Bittersweet.
i agree the buyout seems cheap and is taking away the opportunity for individual investors to hold and benefit from the true multiples of growth from this tech. while i am happy to be out of the hole and end the rollercoaster in the green, it is simultaneously a let down after holding so long through those ups and downs to end at this price point. feels premature.
one question i have about the deal - what's the story with the different classes of shares and how that plays in?
"GE Sweden Holdings AB (“GE”), a Swedish company within the GE Aviation operating unit and an indirectly wholly-owned subsidiary of General Electric Company, has today announced a public cash offer to the shareholders of Arcam to tender all ordinary shares"
and
"The Offer does not include any rights granted by Arcam to its employees under any incentive program implemented by Arcam. GE has stated that they intend to procure fair treatment in connection with the transaction for participants in such programs. Accordingly, the Offer does not include the preference shares of series C in Arcam held by Arcam as hedge for delivery under Arcam’s incentive program. In line herewith, the Swedish Securities Council has, in a ruling on August 29, 2016 (ruling 2016:23), confirmed that the preference shares of series C in Arcam may be excluded from the Offer."
With a brief scan on the website I didn't see details on the 3 classes of shares.
Class C is excluded, are both Class A and B included? Are employee and board member shares outside of this sale?
I don't understand enough to know how this works in an acquisition. It makes sense that GE will allow the arcam enterprise to scale much quicker.
But is it possible the board is unanimous in giving the deal to GE because they have a better deal in one form or another?
wow, phone was broken and didn't see what went down until tonight. good day, we can all take a deep breath and some joy, it's been a fun ride. gotta give props to the first person to write an article i saw years ago on seeking alpha whose name i now forget, david something! was nothing else except in swedish back then, but he got me in at 13 before the quadruple split. of course bought a lot more at the high...but it's a good day.
thanks all, dshade and others from early days and charlie for taking us to the next level and all for the great respectful and interesting board.
life without the arcam obsession, what's next...
be well friends
Interesting they've returned to announcing single orders with new machine, sounds like trying to use orders to help spread word/market. I would, why not
FastEBM New/Old News
About a year ago I sent emails to whatever contact people I could find on the listed partner orgs on the FastEBM project to see if they could give me any information on progress (something others might consider trying again to garner more info for us). One of them replied and I don't think I ever posted. Not too much we don't already know at this point but given the conversation I thought I'd add this tidbit of insight below. I also asked about the high res project but didn't hear back.
"Thanks for getting in touch. The FastEBM project has been very beneficial with the establishment of a 10kW (rather than 3kW) EBM machine that has produced test parts. Many of the large aerospace companies are keen to implement this technology and Arcam have some work to do now to make it available within their normal product range. The immediate benefit of have more EB power available has been in reduced times for heating the powder bed between layers."
Best Regards
Colin Ribton
Technology Consultant
Electron Beam Section
TWI
Granta Park
Great Abington
Cambridge CB21 6AL
UK
Great questions
Year- End Report 2015
Strong growth and significant investments
Net sales increased by 70% to 576.1 (339,0) MSEK
Operating income increased by 50.2 (21.7) MSEK
(including non-recurring costs of approximately 0 (9.3) MSEK)
Net income amounted to 24.3 (57.7) MSEK
(including tax effects for 2014 of 15.8 MSEK
Earnings per share increased to 1.18 (3.10) SEK
50 (35) EBM systems were delivered during the period
Order intake amounted to 58 (42) EBM systems
For the fourth quarter:
Sales increased by 28% to 176.0 (137.1) MSEK
Operating income amounted to 14.0 (15.3) MSEK
Net income increased to 2.7 (15.8) MSEK
Order intake increased by 29 (21) systems
16 (15) EBM systems were delivered in the fourth quarter
Strong growth and significant investments
2015 was another very active and strong year for Arcam. We have worked hard and focused. Our primary focus has been to continue executing and developing our long-term strategy to put the EBM technology in industrial production. To do that, we have developed all three parts of the Group, EBM systems, metal powders and contract manufacturing. We have grown rapidly and we have made substantial investments in increased capacity to continue to meet our customers demand.
After a strong fourth quarter, we reached net sales of 576.1 MSEK and an operating profit of 50.2 MSEK for the full year. Sales increased by 70% and operating profit increased by 131%. During the year we booked 58 new EBM orders, an increase of 38% compared with the previous year. We enter 2016 with an order book of 27 systems.
Business status
Avio Aero in Turin, Italy, is a subsidiary of GE Aviation. Avio Aero has successfully used and evaluated Arcam´s EBM systems for many years and is now moving into series production of state of the art turbine blades. In connection with this they ordered, by the end of the year, 10 new EBM system and with that order they doubled their installation base.
Another important reference business is the order from GKN of two Arcam Q20. Together with GKN we are bringing our EBM-technology to series production of aerospace components.
The deals confirm the great potential of the Arcam EBM technology as a volume production tool for the aerospace industry. We can now see that our aerospace customers are expanding their EBM production facilities.
In September, our customer Beijing AK Medical Chinese announced that the Chinese authorities approved their EBM manufactured orthopedic implants for sale in China. These are the first additive manufactured implants to be formally approved in China. In connection with this decision Beijing AK Medical decided to go into production with these implants and they ordered another five Arcam Q10 systems.
During the year our Italian customer Lima has received the five systems they ordered in the end of 2014. Lima has thereby increased its EBM capacity significantly and Lima is the world's largest manufacturer of additively manufactured implants.
Meanwhile, customers in Japan, Korea, Europe and in the US have introduced new EBM-manufactured products on the market within orthopedics for hips, knees and spine surgery. The EBM technology is therefore now established as a manufacturing method for orthopedic implants.
Our metal powder manufacturer AP&C in Montreal is growing rapidly with several new customers within Additive Manufacturing. To meet the demand, we took in the beginning of the year a third powder reactor in use and in the autumn we decided to expand AP&C with another two powder reactors. With these investments, AP&C will have five complete production lines, of which four are intended for titanium powder and one is intended for Inconel and other alloys.
Management changes and infrastructure
During the year we strengthened our sales and support organization in the US, UK and in China through the recruitment of sales and support engineers. In the UK a new office was inaugurated in Warwick and in the US a new office was opened in Woburn, MA. With the new local offices we move management, customer support and logistics closer to our customers.
During the third quarter a major expansion of our production facilities in Mölndal, Sweden, was finalized. With the expansion we have doubled our production area and we have also opened a new demo and customer training center.
During the year we strengthened our marketing organization by setting up a new central marketing function for Arcam Group, based in the US. The new marketing organization will manage and coordinate Arcam's global marketing including branding efforts and product marketing, in order to fully utilize our position in the aerospace and medical implant industry.
In December Alain Dupont was appointed the new CEO of powder manufacturer AP&C. He succeeds Jacques Mallette who has been CEO of AP&C since 2011 and continues to be involved as Chairman for AP&C.
Financing and ownership structure
In May Industrifonden sold its entire holding in Arcam, corresponding to 10.4% of capital and votes. The buyer was the US-based Oppenheimer Funds.
After the deal Industrifonden has no ownership in Arcam. Industrifonden has been involved in the company since 1999, first as a lender and, since 2002, as an owner.
Oppenheimer has been a shareholder of Arcam since 2014 and, with the new deal, became the largest owner with more than 15% of the outstanding shares.
On May 27 we completed a share issue of 1.8 million new shares directed to Första AP-fonden, providing the company with approximately MSEK 250 before transaction costs. Första AP-fonden represents an engaged, long term ownership which the board expects will contribute to the development of the company.
After those transactions we have a new ownership structure and a very strong cash position. At the end of the third quarter we had approximately 452.9 MSEK in cash. The strong balance sheet provides financial stability that is much appreciated by the large clients we work with in long term projects.
With some of the world's largest companies as customers, a strong cash position and, most important, a team of dedicated and driven employees, we are well positioned to take advantage of our opportunities in the fast growing market for Additive Manufacturing.
Mölndal, February 8, 2016
Magnus René, President & CEO
The information has been made public in accordance with the Securities Market Act and/or the Financial Instruments Trading Act.
The information was published on February 8, 2016 at 08.30 (CET).
For further information:
Magnus René, CEO and President, Arcam
Cell: 46 702 79 89 99 or 1 781 266 6957
E-mail: magnus.rene@arcam.com
Arcam Group provides cost-efficient Additive Manufacturing solutions for production of metal components. Arcam’s Electron Beam Melting (EBM®) technology offers design freedom combined with excellent material properties and high productivity. Arcam is, through its solution orientation and comprehensive product offering, an innovative partner for advanced manufacturing, primarily for the aerospace and medical industries. Arcam offers EBM systems through Arcam AB in Sweden, powder metals through AP&C in Canada and implant contract manufacturing through DiSanto in the U.S.The company is listed on Nasdaq Stockholm and the Head Office is located in Mölndal, Sweden.
________________________________________________________________________________________
Arcam AB • Krokslätts Fabriker 27A • SE-431 37 Mölndal, Sweden • 46-31-710 32 00 • www.arcam.com
This release was sent by Cision
http://news.cision.com/arcam/r/year--end-report-2015,c9909406
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At the disanto event lots of real questions were asked, and magnes generally was pretty direct in answering.
Definitely looks like that could be part of the location choice. A lot of expansion happening, exciting.
This was an awesome article. Would like better translation, will see if I can get my Swedish friend on it. Rene continues to impress with understated but intense ambition. He seems to be saying here what he has said many times before but it becomes more clear now - 'we're in a great situation, we need to grow as quick as possible to take advantage of the amazing opportunity.' Or as he usually says to "exploit the current business environment." Let's hope he delivers, sure seems to be on it, but so much we don't see.
Also interesting additional insight into disanto dissatisfaction.
"The ceo of your subsidiary Disanto left recently. Because he sold all his shares is close at hand to assume that he had to go, probably due to problems in business. What was the background?
-We have not communicated it, but we believe that we have much more opportunity to grow this business, faster than we are doing now. We have a bigger ambition for growth than previous management had. "
Forget exactly where it was will have to look. I think perhaps in first cc after they acquired disanto so maybe tbat changed since. But yes it was some sentiment of dissatisfaction. Will try to look back and find
Seemed like Rene wasn't happy with Disanto progress a while back. Good to see he's doing what has to be done.
And the ap&c new head GE connection could be great and definitely can't hurt. Wonder what exactly happened there as well with the change.
From the outside Rene continues to impress me as ceo. The impression I get is he's very focussed.
Sounds great. Sounds like this equals ability to buy more machines more quickly.
I thought it was 5 or more
Thanks Charlie for all the awesome content you keep posting
I love that end part about emulating the way nature builds. Great post.
Wow, you know they are getting ready for big production if they set up their own atomizer for titanium. Even ap&c only had 2 until recently and that's their whole business. Awesome.
For so long we were all piecing together the puzzle and it seemed clear this growth was going to be real but there was always the lack of surety. Now it's really gonna happen. Awesome.
Speaking of bulk orthopedic orders anyone heard anything about Disanto of late? I went to the investors day there a while back and saw the big space meant to be filled with machines. I remember Rene expressed disappointment in progress a while back but never heard details, did I miss something in a conference call? Would be interested to know how many machines are there now. Next time nearby in ct will try to stop by and see!
Finally our little favorite stock is moving in the right direction for a number of days. Encouraging that it has remembered there are two directions to go at least. And amidst all the market volatility nonetheless.
Up almost 16% in Sweden.
Good buying opportunity if any of us have the stomach for it. Not sure I do.
Omg, for real.
Thanks, missed first time around. Their continued research development collaborations are an important piece of the picture for driving current and future success in such a high tech arena. It's great the eu continues to be a partner along with all the private companies working on different usages.