3D Systems to Add Color with Pending Acquisition of Z Corp.

Just a few months ago, 3D Systems snatched up Alibre, a low-cost CAD package that's gaining ground among makers and hobbyists. This week, the company signed an agreement to buy Z Corp, a competing 3D printer vendor with color-printing technology.

Among competing rapid prototyping vendors, Z Corp distinguishes itself with machines that can print 3D models in multiple colors -- an advantage for those using 3D printing for sales and marketing or those using it to study finite element analysis results. Z Corp also offers a line of 3D scanners -- portable, handheld devices that can capture the shape of objects in point clouds.

When the transaction closes, Z Corp's printers and scanners are expected to bolster 3D Systems' lineup, which spans from low-cost, hobbyist-friendly models (BotMill, RapMan, ProJet, and V-Flash) to professional, production-capable models (ProJet, iPro, sPro, and VX brands).

The combined product lines from 3D Systems and Z Corp, which used to compete with each other, may offer an opportunity to retire certain overlapping businesses. The pending merger puts pressure on other major players in the rapid prototyping market, dominated by a handful of names (Stratasys and Objet, to name but two).

Initially spawned by the need of design and engineering businesses, 3D printing vendors recently expand into the marker market, fueled by enthusiasts, hobbyists, and craft makers. 3D printed models have become an integral part of the projects and concepts on display at Maker Faire, an annual gathering of the do-it-yourself community.

In addition to rapid prototyping equipment, 3D Systems also offer rapid manufacturing services under its 3Dproparts and Quickparts online portals. 3D Systems' rival Stratasys offers similar services through its RedEye business division. Design and engineering shops that do not have in-house rapid prototyping facilities tend to rely on service bureaus to create low-volume parts on demand. Some businesses may also enlist a service bureau to produce parts their own in-house system is not equipped to handle (for example, flexible parts made from new materials).

3D Systems is buying not just Z Corp but also Vidar Systems, which makes medical and dental imaging systems. Both are subsidiaries of Contex Group, an imaging systems provider. The sale of Z Corp and Vidar Systems suggests Contex has decided to return to its origin, to focus on large-format scanners.

The price tag for buying Z Corp and Vidar Systems is U.S. $137 million. Announcing the pending acquisitions, 3D Systems explains, "The acquired businesses generated $58 million of revenue for the twelve months ended June 30, 2011, with consolidated gross profit margins of 55%. 3D Systems expects to incur one-time professional M&A and restructuring expenses in the range of $2.7-3.2 million during the fourth quarter of 2011, related primarily to the completion of this transaction, but inclusive of all other acquisition activities and related restructuring costs that are primarily attributable to the Huntsman specialty materials acquisition."