Nano Dimension and Desktop Metal CEOs Discuss AM Acquisition and Growth Targets

Nano Dimension says its goal is to create a “leader in additive manufacturing” by acquiring Metal desk.

In a call with investors, Yoav Stern, CEO of Nano Dimension, and Ric Fulop, CEO of Desktop Metal, discussed the shared vision for the two 3D printing companies following the announcement today of a transaction valued at $135 million to $183 million.

The news comes a week after Stern sounded optimistic during a panel discussion at RAPID + TCT about the need for consolidation in AM. Commenting on the lack of growth and profitability in the 3D printing sector, Stern suggested that “you can’t make money if you’re too ‘deconsolidated.’”

According to Stern, talks with Desktop Metal began more than 18 months ago, when Fulop and Desktop Metal CFO Jason Cole first visited the printed electronics company. Stern says Nano Dimension was interested in a deal with Desktop Metal even before Stratasys (whose largest shareholder is Nano Dimension, which made a $1.1 billion takeover bid last March) announced a proposed merger with the company in a $1.8 million deal that unraveled last September after failing to win shareholder support. Speaking to TCT at the time, Fulop said, “We will remain an independent company. Desktop Metal is not for sale.”

But sentiment has apparently changed on both sides, with Stern openly admitting that just a year ago he advised shareholders not to enter into a Stratasys-Desktop Metal deal, believing it would be “highly dilutive and result in a significant loss of value.” Today, he explained that he believed the deal was not good for Stratasys at the time, but added that Desktop Metal is “a very different company today than it was a year ago.” Stern confirmed that today’s deal, significantly lower than the one Stratasys offered last year, is good for Nano Dimension and said both companies are “well-positioned (in) terms of what we’re trying to do.” Fulop added that the companies “will come out of this deal extremely well-capitalized” and positioned for growth, with Desktop Metal benefiting from greater go-to-market opportunities and resources to grow.

As for the company’s structure, Stern said the company will share “top management between the two teams.” Stern said he will remain CEO, while Fulop will be brought into the C-suite and join the board. Both companies have multiple locations around the world, including several in similar territories, such as their respective Boston headquarters. While no details were provided, Stern seemed enthusiastic about Desktop Metal’s presence in Germany, but said they will look to consolidate operations in Europe, noting the integration of people and “pooling resources” on a “path to profitability.” The company is expected to generate more than $30 million in synergies over the next few years.

Further commenting on the synergy between the two companies, Fulop said that “there are innovative technologies on both sides,” and that Nano Dimension’s combined portfolio of electronic printing, microprinting, and ceramic processes, along with Desktop Metal’s inkjet, polymer, and digital casting capabilities, create a “modern, completely refreshed portfolio.”

The companies are estimated to have more than 8,000 machines installed. The two companies suggest mutual benefits in terms of technology development, with Nano Dimension’s capabilities adding new functionality to Desktop Metal’s products, while Desktop Metal’s extensive materials portfolio is seen as a valuable asset as AM forges toward manufacturing applications, expected to drive greater demand for materials. Stern also spoke extensively about his proposed vision of cloud manufacturing, which seemed to suggest a future of distributed, digital manufacturing with a greater focus on data use.

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The companies say they have a clear roadmap for growth, but say it will take time. The total addressable market opportunity is believed to be $110 billion by 2031, and the company is targeting high growth margins of at least 50% and predicts a “very bright future over the next eight quarters.”

Echoing his view on consolidation at RAPID+TCT last week, Stern shared his belief that not all of the supposed 350 players in the AM space will survive on their own. Likening the small number of key players in the aerospace industry as a success story of consolidation leading to profitability, Stern said that M&A is a “way of life” for both companies, referring to the numerous acquisitions both companies have made over the past three years, the largest of which was Desktop Metal’s acquisition of ExOne in a $575 million deal.

Fulop said he believes the combined company will be “a force to be reckoned with,” while Stern noted it is “a change for the better.”