Nano Dimension Acquires Desktop Metal for $135M | VoxelMatters

This is how it ends. The saga that has kept the AM industry glued to the newsfeed for most of the past year has come to its most logical conclusion, in retrospect. No Stratasys-Desktop Metal or Nano Dimension-Stratasys mergers, and no 3D Systems-Stratasys acquisition: Instead, Nano Dimension is acquiring Desktop Metal for $135 million (a bargain, you might say) and will use the remaining $1 billion in cash it has to build a new company that will become a formidable competitor in the AM landscape. Or not. One thing we’ve learned is that there are no guarantees.

This means the new group will be able to offer electronics 3D printing by material jetting (AME) via Nano Dimension’s original Dragonfly systems, ceramic stereolithography via Adamtec, and ceramic and sand-bond printing via ExOne, micro-stereolithography via Fabrica Group, and DLP stereolithography via ETEC, and metal-bond and metal-filament jetting via Desktop Metal, with metal stereolithography also via Adamtec. And bioprinting via Desktop Health’s 3D bioplotter. Plus materials and services. A nice mix of products.

Yoav Stern, CEO of Nano Dimension and member of the board of directors, said: “Our combination with Desktop Metal is the next step in Nano Dimension’s evolution to become a leader in digital manufacturing, with mass production capabilities for critical industrial applications. We are excited to join forces with an excellent group of technology leaders who share our vision of transforming manufacturing into Digital Industry 4.0. I look forward to working with Ric Fulop and his team to drive value for all of our stakeholders, including creating opportunities for our employees as part of a larger, more diverse global innovation company, enhancing customer service, and generating long-term incremental shareholder value as we focus on profitable growth.”

Ric Fulop, co-founder and CEO of Desktop Metal, said, “We are excited to combine our pioneering, complementary product portfolios, which will further strengthen our ability to serve customers in high-growth industries with a more complete portfolio of digital manufacturing technologies for applications in metal, electronics, foundry, polymers, micropolymers and ceramics. We look forward to working with Nano Dimension to bring together two great companies and their dedicated teams that can serve our stakeholders to the greatest extent possible.”

Under the definitive agreement, Nano Dimension will acquire all of the outstanding shares of Desktop Metal in an all-cash transaction for $5.50 per share, subject to possible downward adjustments to $4.07 per share, as described below. At $5.50 per share, the transaction represents a 27.3% premium to the closing price of Desktop Metal and a 20.5% premium to the 30-day VWAP of July 2, 2024, for a total consideration of approximately $183 million, likely up to $4.07 per share, or a total of $135 million.

Why do we say this merger is the most logical conclusion? Well, of all the candidates, Nano Dimension had the largest cash reserves, and Dekstop Metal probably needed the cash the most. In addition, Nano Dimension wanted to acquire some of the companies (EnvisionTEC, ExOne) that Desktop Metal acquired after raising cash by going public via a SPAC merger. Furthermore, of all the management teams involved in this merger saga, Fulop and Stern are the ones that are moving faster and are more willing to take risks. It’s a bit surprising that it took this long, but it’s also a matter of making the two companies — and the management — coexist.

Strategic and Financial Benefits of Combining Nano Dimension Desktop Metal

The transaction combines each company’s strengths in diverse end-use applications, additive manufacturing (AM) technologies and material coatings to create the broadest product portfolio spanning metal, electronics, casting, polymers, micropolymers and ceramics. Nano is a recognized leader in 3D printed electronics and high-performance polymer, ceramic and metal applications, with a robust software platform powered by DeepCube’s deep learning-based AI, while Desktop Metal maintains platforms focused on industrial-scale metal and polymer applications with proprietary materials, software and sintering solutions.

The combination of both companies will ideally create a leader in innovative 3D printing solutions that will drive the transition from prototyping to mainstream tooling and end-use part production, a stated goal of both companies from the beginning. The combined company will be the first AM provider to cover the full range of customer needs from prototyping to production for critical and high-throughput medical and electronic applications in industrial and high-performance materials.

The combined company is expected to expand cross-selling opportunities to its existing customers, as well as grow its overall customer base through optimized customer acquisition capabilities and joint go-to-market strategies, including targeting customers with complementary offerings in common key markets in automotive, aerospace/defense, industrial, medical, and R&D/academic. Together, the combined company will serve a range of industrial verticals with blue-chip customers, including Amazon, Caterpillar, Fraunhofer Institute, NASA, Raytheon, REHAU, Tesla, Thermo Fisher Scientific, Toyota, the U.S. Army and others.

Combined, the Nano Dimension and Desktop Metal portfolios will focus on advanced, premium-margin solutions supported by an installed base of over 8,000 systems, representing significant opportunities to generate recurring revenue from expanded services and consumables. The combined company will benefit from significantly increased scale and a diversified profile with combined revenues of $246 million in 2023, 28% of which will be generated from recurring revenue streams from services and consumables. The combined company’s complementary expertise and leadership in mass production solutions will create an AM company with a track record of delivering high-volume manufacturing solutions.

The combination will enable the pooling of resources across administration, sales, marketing and R&D and will generate efficiencies and cost savings opportunities while enhancing R&D and innovation capabilities. The combination is expected to generate more than $30 million in synergies over the next several years, in addition to previously announced cost savings across each of the two organizations. We believe the business operations and capabilities will provide consolidation opportunities as the combined company focuses on core geographies, including offices, R&D and manufacturing facilities in multiple locations in the U.S., U.K., Germany, Switzerland, the Netherlands, Italy, Israel and the Asia-Pacific region.

It will be interesting to see what effect this merger has on the stock price of the new company. Both companies have been falling, but Desktop Metal has fallen more than Nano Dimension. They are not alone. Stratasys and 3D Systems have been free-falling near record lows. If the stock market reacts positively to this merger, perhaps they will be the next to reignite the discussion?

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