2024-07-03 19:35:35
Desktop Metal is being acquired by Nano Dimension. The Israeli company is taking its American counterpart off the stock exchange for 183-135 million euros. At least if all shareholders agree. Nano Dimension has a huge war chest. After the acquisition, together with Desktop Metal’s (modest) cash position, the company is expected to have regarding $665 million in cash. The acquirer will lend Desktop Metal $20 million directly.
Desktop Metal’s search for an acquisition partner was a long one. The US company had been in discussions with Stratasys for several months. During this period, Nano Dimension wanted to acquire Stratasys. Ultimately, these plans fell through due to shareholder reluctance, leaving Nano Dimension with a strong cash position.
Logical steps
That money is now being used to buy into the AM promise that was made years ago. Yoav Stern, CEO and board member of Nano Dimension, sees the acquisition as a clear step in the company’s strategy to establish market leadership in the additive manufacturing industry. “We are excited to join forces with a group of exceptional technology leaders who all share our vision of transforming manufacturing to digital Industry 4.0.” Ric Fulop, co-founder and CEO of Desktop Metal, had a similar response. During the call, he used the word “juggernaut” to describe the combined group. An AM giant. Just like Shapeways, Desktop Metal had trees growing to the sky a few years ago. The group will be a billion dollar company in the fast-growing additive manufacturing market. Not yet.
Why is Nano Dimension excited regarding Desktop Metal now?
20 million is a buffer
The $20 million that Desktop Metal borrowed from Nano Dimension was intended as a buffer. The 3D printer maker believes it does not need the money. If that is the case, shareholders’ earnings per share will be reduced by up to $0.80. The acquisition price is a minimum of $135 million and a maximum of $183 million, depending on some other conditions.
Major Shareholders
A few weeks ago, one of the company’s shareholders Nano sizeCanada Murchinson Ltd., An open letter Still asking regarding rumors of interest in Desktop Metal. In mid-June, the US company’s stock price rose 60% in a short period of time due to heavy volume. Murchinson pointed out in an open letter that Nano Dimension CEO Yoav Stern repeatedly stated in last year’s Stratasys acquisition battle that Desktop Metal is underperforming, mostly burning cash, and destroying a ton of shareholder valueThe $5.50 cash offer is more than 20% above the average price over the last month. Explaining the deal, Yoav Stern compared Desktop Metal today to where it was a year ago. “It’s like buying a house in a prime location for $10 million, but the house wasn’t furnished yet. Now Ric has furnished it and the price is lower.” Shareholders clearly see value in the deal: Nano Dimension’s stock price jumped following the Desktop Metal acquisition was announced as volume increased.
The Merged Group expects to have negative cash flow for an extended period of time
Enough cash to last a long time
Whatever you think of the deal, the two companies are complementary with little overlap. The merger will create an additive manufacturing company that covers a wide range of materials and applications using additive manufacturing technology. At the same time, neither company has so far established a dominant position in the promising value chain, and the market is currently weak. The two companies have a total of regarding 8,000 additive manufacturing systems on the market and a total turnover of $246 million. 28% of this comes from recurring revenues such as service contracts and materials. Nano Dimension points out that the new combination has a sufficient cash position, not to mention the savings it is making. This at least provides financial certainty that the combined group can survive the difficult times in the additive manufacturing industry in the future. Because if the merger goes ahead, the combined group expects to have negative cash flow within one and a half to two years.
The acquisition Yoav Stern talks regarding is not just regarding a financial transaction. It is regarding a vision for the future of additive manufacturing, in which both companies have found each other and can complement each other.
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