Nano Dimension and Desktop Metal CEOs discuss acquisition and AM growth targets

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Nano Dimension says it is aiming to create ‘a leader in additive manufacturing’ with its acquisition of Desktop Metal.

Speaking during an investor call, Nano Dimension CEO Yoav Stern and Desktop Metal CEO Ric Fulop discussed the shared vision between the two 3D printing companies following the announcement of a deal earlier today, which is expected to be worth between 135-183 million USD.

The news comes one week after Stern spoke bullishly during a keynote panel session at RAPID + TCT about the need for consolidation in AM. Commenting on the lack of growth and profitably in the 3D printing sector, Stern suggested 'you can’t make money when you are too 'de-consolidated.''

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 claims Nano Dimension was interested in the deal with Desktop Metal even before Stratasys (of which Nano Dimension is the biggest shareholder and made an offer of 1.1 billion USD to acquire in March last year) announced its proposal to merge with the company in a 1.8 million USD deal that was terminated last September after it failed to secure shareholder support. Speaking to TCT shortly after the deal fell through, Fulop claimed: "We'll remain an independent company. Desktop Metal is not for sale."

But sentiments have evidently changed on both sides and Stern was forthcoming in acknowledging that just a year ago he had advised shareholders against a deal between Stratasys and Desktop Metal, believing that it would be “highly dilutive and result in significant value destruction.” Today, he clarified that he felt the deal was not right for Stratasys at the time but added that Desktop Metal is "a very different company today than it was a year ago." Stern confirms that today’s deal, significantly lower than the one proposed by Stratasys last year, is a good one for Nano Dimension, and said the two are "well prepared [in] knowing what we are trying to do." Fulop added that the companies will “come out extremely well capitalised” from this deal and be in a position for growth, with Desktop Metal benefiting from more go to market capabilities and resources to expand.

In terms of company structure, Stern said the company will share 'top leadership between the two teams.’ Stern says he will remain as CEO while Fulop will be invited to the C-suite and to join the board. Both companies have multiple locations around the world, including several in similar territories, such as their respective headquarters in Boston. While no specifics were shared, Stern appeared enthused by Desktop Metal’s presence in Germany but said they would aim to consolidate activities in Europe, noting integration of people and ‘pooling of resources’ on the ‘path to profitability.’ The company is estimated to generate in excess of 30 million USD in run-rate synergies in next few years.

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Commenting further on the synergy between the two companies, Fulop said there are “innovative technologies on both sides” and the combined portfolio of Nano Dimension’s electronics, micro and ceramics printing processes alongside Desktop Metal’s binder jet, polymer and digital casting capabilities, creates a “modern, fully refreshed portfolio.”

Together, the companies are estimated to have over 8,000 machines installed. Both suggest mutual benefits across technology developments, with Nano Dimension’s capabilities adding new functionalities to Desktop Metal products, while Desktop Metal’s expansive material portfolio is thought to be a valuable asset as AM's forge towards production applications is expected to result in greater demand for materials. Stern also spoke broadly about a proposed vision of cloud manufacturing, which seemed to imply a future of distributed, digital manufacturing with greater emphasis placed on leveraging data.

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The companies claim to have a clear roadmap for growth but said it will take time. The total addressable market opportunity is believed to be at 110 billion USD by 2031 and the company is aiming for high growth margins of at least 50% and predicting 'a very bright future in the next eight quarters.'

Harking back to his point about 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. Making a comparison with the small number of key players in the aerospace industry as a success story of consolidation leading to profitability, Stern said mergers and acquisitions are "a way of life" for both companies, referring to the multiple acquisitions made by both over the last three years, the biggest of which was Desktop Metal’s acquisition of ExOne in a deal worth 575 million USD.

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