Stratasys shareholders voted against the company's proposed $552 million acquisition of Desktop Metal on Thursday.
As a result, the 3-D printer maker said it is terminating the deal with Desktop Metal, which the board had endorsed as a way to maximize shareholder value.
"We have decided to undertake a comprehensive and thorough review of all available strategic alternatives," Dov Ofer, the company's board chair, said in a news release.
The vote was held early Thursday morning during a special shareholder meeting.
Only 21.4% of the shareholders approved of the plan to acquire Desktop Metal, according to a filing with the Securities and Exchange Commission.
Stratasys, based in Eden Prairie and Rehovot, Israel, announced at the end of May plans to acquire Burlington, Mass.-based Desktop Metal.
With that deal now canceled, the board of directors announced it was conducting a review of strategic alternatives. A review that could bring new life to deals that were made this year and rejected by the board or a whole new set of options.
The board also announced it has adopted a new shareholder-rights plan — or poison pill — that will be in effect for the next three months while it explores alternatives.
Desktop Metal is a smaller additive manufacturing company that — had the acquisition proceeded — would have extended the 3-D printing offerings of Stratasys.
By canceling the deal with Desktop Metal, Stratasys will presumably have to pay as much as $32.5 million in a termination fee.
It has been an expensive summer for Stratasys. The company had to defend itself from an unsolicited partial tender offer from its largest shareholder, Nano Dimension, which was seeking to take control of Stratasys. The saga has already cost the company millions in legal and professional fees.
Nano Dimension withdrew its offer on July 28 after it appeared it would not get enough shareholder support for its deal after a vigorous defense by the board and management of Stratasys.
Stratasys also likely spent more money vetting offers from 3D Systems, a larger competing 3-D printing company based in Rock Hill, S.C.
The two companies have explored various merger proposals in previous years and 3D Systems made multiple cash and equity deals to acquire Stratasys this year.
The Stratasys board didn't specify what strategic alternatives the company would pursue. Possibilities include a strategic transaction, potential merger, business combination or sale.
Greg Palm, senior research analyst with Minneapolis-based Craig-Hallum, predicted in a research note he published Wednesday that shareholders would vote down the Desktop Metal deal, thus opening up more options.
Renewed offers from Nano Dimension and 3D Systems remain a possibility but wouldn't be the only ones and Palm noted the pending deal with Desktop Metal prevented Stratasys from seeking other potential acquirers.
"We have previously noted there are other large players that have a footprint in the 3D printing industry and could be interesting acquisition candidates," Palm wrote in his Wednesday note. "At this point, Nikon makes the most sense given its strategic fit and its own capital allocation strategy."
Michael Molitch-Hou, editor of 3Dprint.com, which follows the additive manufacturing industry has said he believes that Stratasys, 3D Systems and Desktop Metal could all be combined at some point.
Shares of Stratasys closed at $13.21 a share, rising 7.8% on Thursday after the results of the special shareholder meeting were released. Shares of 3D Systems also finished higher on Thursday closing at $4.62 a share, jumping 5% while shares of Desktop Metal closed at $1.39 a share, down 1.4%.