Stratasys and Desktop Metal combine in a $1.8 billion deal

Almost exactly a year ago – on May 12, 2022, we were dealing with one of the largest mergers in the history of the 3D printing industry, when the two leading manufacturers of desktop 3D printers – Ultimaker and MakerBot – announced a merger into one global concern. One of the entities participating in this transaction was Stratasys – the owner of MakerBot. Today we are dealing with another, but incomparably larger event. Stratasys and Desktop Metal have announced a definitive agreement that brings the two companies together in a deal worth approximately $1.8 billion, creating the largest purely additive-based entity in the history of the global 3D printing market.

The deal was announced late at night on Wednesday, May 24, 2023. In a published press release, the companies say they aim to generate $1.1 billion in revenue together by 2025, with significant growth potential. The merger was unanimously approved by the Boards of Directors of both companies. As part of the merger agreement, Desktop Metal shareholders will receive 0.123 Stratasys common shares for each Class A common share of Desktop Metal. This represents a value of approximately $1.88 per Grade A share of Desktop Metal based on the closing price of Stratasys common stock of $15.26 as of May 23, 2023.

The transaction, which is expected to formally close in the fourth quarter of 2023, will leave existing Stratasys shareholders approximately 59% of the combined company and former Desktop Metal shareholders approximately 41% of the new company.

“This is an important day in the evolution of Stratasys,” said Dr. Yoav Zeif, CEO of Stratasys. “The combination with Desktop Metal will accelerate our growth trajectory by bringing together two market leaders to create a global provider of industrial additive manufacturing solutions.” Ric Fulop, CEO of Desktop Metal, said, “We are excited to complement our portfolio of metal, sand, ceramic and dental 3D printing solutions with Stratasys polymer offerings. Together, we strive to create an even more flexible offering with a diverse customer base across industries and applications to drive long-term sustainable growth. We look forward to merging with Stratasys to achieve profitability while driving further innovation for a larger customer base and providing expanded opportunities for our employees.”

A joint press release from Stratasys and Desktop Metal states that the transaction brings together complementary IP portfolios with more than 3,400 patents and pending patent applications. The companies said that together they have invested more than $500 million in research and development (R&D) over the past four years, and the combined company will have one of the largest research and development teams in the industry, with more than 800 scientists and engineers.

The combined companies expect to generate approximately $50 million in additional cost savings per year through 2025 through reduced selling, general and administrative costs, supply chain management and operational process optimization. The combined company is also expected to generate an additional $50 million in annual synergies through 2025 through shared access to markets.

The combined company aims to achieve 10-12% adjusted EBITDA in 2025. Together, Stratasys and Desktop Metal had $437 million in cash and cash equivalents at the end of the first quarter of 2023, and the companies say the deal accelerates the combined company’s “financial flexibility” through a “well-capitalized balance sheet” to drive future growth.

Dr. Zeif will lead the combined company as chief executive officer (CEO) with Ric Fulop as chairman of the board. Upon completion of the transaction, the board of the combined company will consist of 11 members, five of whom will be selected by Stratasys and five by Desktop Metal, plus Dr. Zeif as CEO. Stratasys Chairman Dov Ofer will serve as the chief independent director of the combined company.

The transaction is expected to close in the fourth quarter of 2023 and is subject to customary closing conditions, including approval by Stratasys and Desktop Metal shareholders, and certain government and regulatory approvals.

Source: www.desktopmetal.com