In a daring transfer to consolidate the additive manufacturing (AM) business, Israeli 3D printer producer Nano Dimension Ltd. (Nasdaq: NNDM) has introduced its acquisition of Markforged Holding Company (NYSE: MKFG) in an all-cash transaction valued at $115 million. Nano Dimension will purchase all excellent shares of Markforged at $5.00 per share, a 71.8% premium to Markforged’s inventory value earlier than the announcement.
This acquisition follows Nano Dimension’s latest settlement to buy Desktop Metallic (NYSE: DM) and positions the mixed firm to guide the AM market with a various know-how portfolio. Put up-acquisition, Nano Dimension, Desktop Metallic, and Markforged are anticipated to realize a mixed income of $340 million, based mostly on fiscal yr 2023 information.
The acquisition presents Nano Dimension entry to Markforged’s strengths in composite and steel 3D printing, together with its over 15,000 put in methods and a powerful gross margin of 48.3% (51.9% non-GAAP). These belongings will improve Nano Dimension’s AM product choices, which to this point embody inkjet 3D printing for electronics (together with different electronics manufacturing applied sciences), high-resolution digital gentle processing (DLP) for nano- and micro-scale components, in addition to DLP for metal- and ceramic-loaded resins.
Yoav Stern, Chief Government Officer and member of the board of administrators of Nano Dimension, stated, “In combining with Markforged, Nano Dimension is taking daring motion in its journey in the direction of changing into a digital manufacturing chief and being a foundational pillar of Trade 4.0. Markforged is an distinctive firm with progressive AM supplies and options for true manufacturing. Their prowess is validated by their greater than fifteen thousand put in and linked methods within the discipline with many main names throughout key business verticals. I’m excited to work with Shai Terem and his staff, who’ve carried out an distinctive job creating their cutting-edge options. That is all of the extra substantial after we take into consideration the anticipated closing of our take care of Desktop Metallic. We consider the mix of Nano Dimension, Desktop Metallic, and Markforged additional strengthens our distinctive alternative in creating worth for our shareholders, clients, and workers as we work to ship worthwhile development, distinctive companies, and notable profession improvement alternatives.”
Addressing the $25 Million Lawsuit Settlement
The timing of the deal is fascinating, as Markforged’s worth was critically knocked down by settling a $25 million lawsuit with Steady Composites, impacting its money circulate. Of the $93.9 million in money and equivalents reported by Markforged as of June 2024, $19.1 million is restricted to cowl liabilities associated to the lawsuit. This contains an upfront fee of $18 million due within the fourth quarter of 2024, with the remaining $7 million to be paid over the subsequent three years.
This authorized obligation may restrict Markforged’s operational flexibility and scale back its near-term contribution to profitability. Nevertheless, Nano Dimension’s post-acquisition money place, anticipated to be round $475 million, gives a monetary buffer that ought to mitigate the impression of the settlement and assist the mixed entity navigate these challenges.
Timing the Acquisition
Each the settlement and the acquisition information observe a major rate of interest lower introduced by the Federal Reserve, which may result in elevated shopping for energy by companies who have been hesitant to spend money on capital gear throughout the previous years of inflation. In that means, Nano Dimension’s transfer is timed completely at what may doubtless be Markforged’s lowest worth earlier than renewed machine buying by the bigger market.
On the identical time, The Bureau of Trade and Safety (BIS), an company throughout the US Division of Commerce, issued an interim remaining rule on new export controls for a number of essential applied sciences, together with steel AM. As 3DPrint.com Macro Analyst Matt Kremenetsky identified, the doc mentions a presumption of approval for exports to many EU nations, South Korea, Japan, and Australia and a presumption of denial for exports to China and Russia. Given these export controls, if Nano Dimension turns into a steel 3D printer producer, it can profit from elevated exports.
Merging the Competitors
This acquisition comes at a time of appreciable upheaval within the AM business, marked by quite a few acquisition bids by Nano Dimension of Stratasys, 3D Methods, and, lastly, the termination of the deliberate merger between Desktop Metallic and Stratasys in September 2023. Regardless of Desktop Metallic shareholders approving the merger, 78.6% of Stratasys shareholders voted in opposition to it, resulting in the cancellation of the deal and the Nano Dimension acquisition, which involves a shareholder vote on October 1.
With the acquisitions of Desktop Metallic and Markforged, Nano Dimension is positioning itself as a dominant participant within the AM house. The mixed firm could have a broad array of applied sciences, many overlapping largely because of the heated competitors between Desktop Metallic and Markforged.
The P100 steel binder jet system from Markforged by way of its Digital Metallic acquisition. Picture courtesy of Markforged.
With a fancy backstory involving Desktop CEO Ric Fulop sitting on the board of Markforged and parallel releases of filament-based steel 3D printing applied sciences, each companies have sued and countersued each other for years. Moreover, the 2 corporations each acquired main steel binder jet companies. Whereas Desktop’s ExOne has the dominant market share in steel binder jet, Markforged purchased Digital Metallic to acquire the second main market share. Altogether, this might give Nano Dimension overwhelming protection in a quickly rising sector, giving HP and GE stiff competitors within the house.
Different overlapping product strains embody the aforementioned steel filament house, with each corporations providing low-cost methods for 3D printing metal-loaded supplies that may be sintered into dense steel components. These would complement Nano Dimension’s metal-loaded resin know-how from Admatec, whereas Desktop’s ETEC merchandise align with Nano’s small-scale DLP.
In whole, Nano Dimension would grow to be a major competitor to the 2 main producers, Stratasys and 3D Methods, who’ve equally numerous portfolios. Nevertheless, Stratasys doesn’t produce steel 3D printers. It might be useful for it to accumulate a agency that does, equivalent to Velo3D, but it surely doesn’t appear to have the funds to take action for the time being. Given the present monetary points confronted by Stratasys and 3D Methods, they themselves might even be up for acquisition.
It’s arduous to understand how lengthy this deal has been within the making, however it’s doable to hint a considerably steady line from the enhance of AM by way of COVID provide chain gaps to public listings by way of mergers with particular function acquisition corporations (SPACs), investments by ARK Administration, the SPAC bubble, the merger drama of the final yr, by means of to now. Given the relationships between Elon Musk and ARK’s Cathie Wooden, together with SpaceX with Velo3D, it could be fascinating to know the place Velo suits into this bigger saga.
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