Nano Dimension, which develops 3D printers for electronics, will acquire Desktop Metal, which mainly makes 3D printers for producing metal parts. The deal is an interesting postscript to Nano Dimensions’s efforts last year to acquire Stratasys.
Those efforts saw Nano Dimension make repeated and increasingly aggressive overtures to acquire Stratasys, which were all firmly rebuffed. Part of Stratasys’ efforts to fight off this unwanted attention was a proposed merger with Desktop Metal, which fell through when 3D Systems put in its own bid to merge with Stratasys.
Nonetheless, this episode highlighted the weakness in Desktop Metal’s position, with the company having overreached itself in its efforts to expand. Following the collapse of the merger with Stratasys, Desktop Metal set out a restructuring plan to cut costs and improve results. The figures for Q1 2024 showed more or less static revenue of US $40.6 million, with a net loss of US $52.1 million and adjusted EBITDA of -$13.6 million. At that time, Ric Fulop, the founder and CEO of Desktop Metal, predicted a return to profitability in the second half of this year.
Meanwhile, Nano Dimension itself has had to battle with its largest shareholder, Murchison, for control of its cash reserves after raising $1.5 billion to fund further growth. I’ve previously written about how this shaped the efforts to acquire Stratasys. Earlier this year Nano Dimension announced a plan to buy back up to $200 million worth of its American Depositary Shares until October 2024. This follows a similar $96 million share buyback last year.
The company has implemented a Reshaping Nano Initiative that has aimed to cut costs and improve operating efficiencies, which appears to be working. The final figures for the 2023 financial year showed a rise in revenue from $43.6 million in 2022 to $56.3 million in 2023. The final result after taxes was a loss of $55.6 million, which was a distinct improvement on the 2022 loss of $228 million.
Nonetheless, Nano Dimension does still have a large war chest for expansion. So it will acquire all outstanding shares of Desktop Metal in an all-cash transaction for $5.50 per share, which would value the company at $183 million. However, this price may drop possibly as low as $4.07 per share or $135 million if the cost of the transaction is higher than expected, or if it drags into 2025 and Desktop Metal has to draw on a $20 million secured loan facility from Nano Dimension. Nano Dimension will finance the transaction using its cash on hand.
Nano Dimension says that it expects to still have some $665-680 million cash after the deal closes, depending on the final price. This assumes that the company won’t need to repurchase Desktop Metal’s $115 million outstanding convertible notes.
Nano Dimension has grown out of all recognition from the small start-up company that I first encountered back in 2016 that specialized in developing a 3D printer to build custom electronic boards. The company has since added an impressive array of different specialties. This includes – GIS, for inkjet drive electronics; DeepCube, for AI automation; Admatec, for 3D printers; Fabrica, for 3D-printing materials; and Essemtec, for pick and place technologies. The result of all this is that Nano Dimension now has a very rounded portfolio of different technologies and appears to have been quite successful at integrating these together. The business is still centered around additive manufacturing but with an emphasis on the volume manufacturing aspect.
Desktop Metal adds complementary additive manufacturing, particularly in metal for industrial-scale production, including recurring revenues from services and consumables. There may also be cross-selling opportunities as well as savings in combining resources. The company works with several print technologies, including binder jetting and digital light processing, as well as several materials such as metal, ceramics and polymers.
Yoav Stern, chief executive officer of Nano Dimension, commented, “Our combination with Desktop Metal is another step in Nano Dimension’s evolution to become the leader in digital manufacturing, with capabilities in mass manufacturing for critical industrial applications. We’re excited to join forces with an excellent group of technology leaders, all of whom share our vision for transforming manufacturing to Digital Industry 4.0.”
He continued, “I look forward to working with Ric Fulop and his team to drive value for all our stakeholders, including creating opportunities for our employees as part of a larger, more diversified global innovative company, driving customer support and generating long-term growing value for shareholders as we focus on profitable growth.”
The deal is expected to close in Q4 of 2024. It’s been approved by the Boards of Directors of both companies but still needs the approval of Desktop Metal’s stockholders, and is subject to the usual regulatory approvals.
You can find further details on both companies from nano-di.com and desktopmetal.com.
First published on www.nessancleary.co.uk. Republished with permission
