Subscribe to receive updates on Mergers & Acquisitions for free! Sign up and you’ll receive a myFT Daily Digest email every morning, rounding up the latest news in the Mergers & Acquisitions industry. The world of 3D printing, once hailed as a revolutionary technology for producing a wide range of products, is now facing a period of consolidation. Four leading manufacturers – Stratasys, 3D Systems, Nano Dimension, and Desktop Metal – are currently engaged in merger discussions that could potentially reduce the number of companies to two or three.
Investor interest in 3D printing was initially high, with companies like Stratasys, 3D Systems, Nano Dimension, and Desktop Metal attracting investments from renowned tech stockpicker Cathie Wood’s Ark Investment Management. However, their valuations have dropped significantly since early 2021 due to challenges in using the technology for mass production and financial difficulties. As a result, these companies are turning to mergers and acquisitions in an effort to survive and thrive.
The current state of the 3D printing industry has been described as stagnant, plagued by talent turnover and governance issues. Tech entrepreneur Chris Pracha, who sold his company to Stratasys, believes that M&A activity is necessary to shake things up and bring about much-needed change.
Stratasys, for example, recently agreed to acquire Desktop Metal by paying $700 million in stock. This move comes after Stratasys had initially invested venture capital in Desktop Metal a decade ago. However, Stratasys itself is now a target for acquisition by 3D Systems, which has been actively seeking to acquire the company since 2021.
Nano Dimension also wants to take control of Stratasys, having taken a 12% stake in the company last year. In March, Nano Dimension made an unsolicited tender offer to buy all of Stratasys, later amending its offer to seek a majority stake. Despite generating less than $50 million in revenue last year, Nano Dimension boasts a cash balance of nearly $1 billion, which it plans to use to strengthen its offer for Stratasys.
The merger discussions and acquisition bids have not been without controversy. There is ongoing litigation between the companies and their shareholders. Stratasys has faced criticism from 3D Systems and Nano Dimension, with both companies making multiple offers to acquire Stratasys. Stratasys has yet to engage with these offers, dismissing them as opportunistic.
Meanwhile, activist investors are also getting involved. Donerail Group, which holds a 2% stake in Stratasys, has accused the company of fiduciary negligence and called its resistance to the offers from 3D Systems and Nano Dimension “unconscionable.” On the other hand, a group of activist investors, Murchinson Ltd, Anson Advisors, and Boothbay Fund Management, has sought to replace Nano Dimension’s board and demanded that the company return its cash hoard to shareholders instead of pursuing Stratasys.
The drama surrounding these deals has spilled over into the courts, with lawsuits being filed in both Israeli and New York courts. The outcome of shareholder votes and regulatory disclosures is also being contested.
Despite the challenges and controversies, the players in the 3D printing industry are united in their belief that consolidation is necessary. The merging of Stratasys, 3D Systems, and Nano Dimension seems to be a likely outcome. The question now is the order in which these pieces will come together.
In the recent deal announcement between Stratasys and Desktop Metal, the companies projected that the 3D printing market would reach $100 billion in a decade. However, the combined revenue of the four listed companies currently stands at less than $2 billion annually.
The future of the 3D printing industry remains uncertain, but one thing is clear: change is on the horizon.
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