Activist investor Donerail to vote against Stratasys acquisition of Desktop Metal

By Svea Herbst-Bayliss

NEW YORK, Sept 21 (Reuters) - Activist investor Donerail Group, which owns shares in Stratasys, on Thursday said it will vote down the company's plan to buy Desktop Metal next week, the latest twist in a years-long drama over consolidation of the 3D printing industry.

Donerail Group's managing partner William Wyatt, who cemented his activist investment skills at Starboard Value, made his firm's voting plan public one day after influential proxy advisory firm Institutional Shareholder Services on Wednesday urged shareholders to reject the deal on Sept. 28.

He also said his firm would prefer a proposed plan by 3D Systems to buy Stratasys and criticized the Stratasys board for rejecting that proposal.

"We intent to vote AGAINST" the Stratasys deal "given the multitude of clear value-creating options that do exist," Wyatt said in a release. In a letter written in June, Wyatt said his firm owned 2.3% of Stratasys.

Stratasys last week turned down 3D Systems' s bid to buy the company, sticking instead with plans to make its own acquisition.

ISS on Wednesday surprised many investors and analysts when it weighed in on a rival offer that had been rejected, saying the stock and cash offer from 3D Systems for Stratasys would be a more convincing route to value creation .

Donerail agreed, writing "ISS questioned critical matters that, we believe, speak to the Board’s inability to act as fiduciaries and properly oversee Stratasys management."

Representatives for Stratasys declined to comment.

Stratasys investor Nano Dimension, which owns 14.1% of the company, said last week that it would vote against the merger. (Reporting by Svea Herbst-Bayliss; Editing by David Gregorio)