March 13, 2023
Last week, in a move that could reshuffle the additive manufacturing (AM) market, Nano Dimension formally offered to acquire 3D hardware maker Stratasys. The company announced it “made a formal, non-binding offer to acquire Stratasys Ltd. for $18.00 per share in cash.”
Explaining the move, Nano Dimension says it “views Stratasys as a strategic, complementary asset in the relatively mature polymer-based AM market segment. The proposed transaction would create a market leader with unparalleled portfolio of materials, software, and deep learning with a go-to-market strength in the form of sales channels.”
Soon after the offer came out, Stratasys issued a response, stating “the Stratasys Board of Directors will carefully review and evaluate the proposal to determine the course of action that it believes is in the best interests of the Company and Stratasys shareholders.” So far, it has given no indication it would accept or reject.
Terry Wohlers, Head of Advisory Services and Market Intelligence, Wohlers Associates, said, “If the deal goes through, it could go down as one of the largest and most unexpected acquisitions in the AM industry. Even so, I doubt Stratasys’s business would change much in the short term.”
Nano Dimension has made a formal offer to acquire Stratasys. Our leadership believes that, if a deal is finalized, merging these two companies will yield amazing results for accelerating the efforts that both are investing in.$NNDM #3Dprinting #additivemanufacturing #stratasys pic.twitter.com/EudbiXqsD8
— Nano Dimension (@3Dpcb) March 10, 2023
An Unexpected Merger
Stratasys and 3D Systems are in the top tier of the AM hardware market, dominated by just a handful. In 2021, 3D Systems acquired Additive Works, a German software maker, to incorporate Additive Works' simulation into 3D Systems’ software.
Nano Dimension was founded in 2012. Its technology allows printing embedded circuitry in the parts, promising to revolutionize the chip and electronics segment. In the 4th quarter of 2022, the company reported the highest quarterly revenue in its history.
Wohlers said he knew Nano Dimension has a robust cash reserve, and might be in a buying mode, but he “did not anticipate Stratasys as a target.”
Stratasys was founded in 1989 in Eden Prairie, Minnesota, and incorporated in Israel. It sold its first 3D printer in 1992. Its stock debut in 1994 on NASDAQ. If the company accepts Nano Dimension's proposal, the transaction will be an exception to the norms of older, established tech firms absorbing younger startups.
A Shift in AM Landscape
Last year, Nano Dimension acquired 12.12% stakes in Stratasys. Yoav Stern, Chairman and Chief Executive Officer of Nano Dimension, described the purchase as “the formation of a strategic investment in a market-leader.” Currently Nano Dimension owns approximately 14.5% of outstanding Stratasys shares. The offer is to acquire the remaining shares of Stratasys for approximately $1.1 billion in cash.
This week, explaining the offer in a video, Stern said, “In the combination of Nano Dimension and Stratasys, one and one equals more than two. Actually, more than three.” In his analysis, Stratasys “did a lot of things right, but they did many more things wrong.” He praised Stratasys's expansion of its polymer-based printing business. “But their technology got older over time ... and they continued to buy companies with only polymer machines, Nowadays, in order to go into production, companies need AM with metal and ceremics ... We have ceremics, metal, and electronics machines. The combination of the two companies will be amazing, because we're going to bring in the growth engine.”
In the letter sent to Stratasys, Nano Dimension says, “a key aspect of Nano’s interest in the company is the importance of the current management team staying with the combined business. We would expect the current management team to enter into retention programs (performance and time based) for a few years with various mechanisms to qualify for a cash 'stay' package.”
If the acquisition occurs, Wohlers anticipates, “Nano Dimension would quickly rise close to the top” of market leaders.