Industrial 3D printing giants Stratasys and Desktop Metal have provided additional detail on their “landmark” intention to merge. On a call with investors, CEO’s Yoav Zeif and Ric Fulop provided additional insight into why the merger of Desktop Metal and Stratasys will create value. The combined entity should provide a wide range of 3D printing services and technologies, from metal to polymer, sand to ceramic solutions.
“The combination of our companies would significantly accelerate our growth trajectories, creating a uniquely scaled industrial additive manufacturing company,” announced Dr. Yoav Zeif, CEO of Stratasys. He highlighted the synergies and value proposition of the merger, stating that “together, we will have a diversified and wholesome product portfolio and one of the largest global go-to-market networks in 3D printing.”
Zief noted that the merger will result in a blending and complementing of strengths and technologies. Stratasys – a leading polymer 3D printer – will be able to bring its outstanding influence into the aerospace and automotive industries as well the consumer products, healthcare and dental verticals. Desktop Metal, a leader in mass-production of metal, sand and ceramic 3D printing, as well as restorative dental solutions, compliments Stratasys.
The deal will also bring significant financial benefits. This is expected to drive growth and deliver value to shareholders. This combination could unlock the potential to realize $50 million worth of annual cost synergies, and $50 million worth of revenue synergies by 2025. Consequently, Zeif predicts, “Combined, we expect to deliver approximately 10% to 12% of adjusted EBITDA margin in 2025.”
It is hoped that the merger of Stratasys with Desktop Metal will be a calculated fusion of forces in additive manufacturing. It’s a pairing that promises to generate a powerful, dynamic, and influential industry entity that could transform the face of 3D printing on a global scale.
Stratasys’ shareholders will hold approximately 59%, while Desktop Metal stockholders, on a fully diluted scale, will own about 41%. Some of the more vocal stock message board users have expressed dissatisfaction at the merger. They believe Desktop Metal can achieve better returns if they continue on their own path.
Ric Fulop (Chairman and CEO of Desktop Metal) will become the Chairman of Board of Directors after the transaction closes, which is expected to take place in Q4 2023. As Zeif pointed out, “this combination will enable us to expand use cases, grow revenue, and enhance profitability.”
Market Landscape for Industrial Additive Manufacturing: A Seismic Change
Ric Fuko, CEO of Desktop Metal highlighted the enormous opportunity in the conference. The merger of Stratasys and Desktop Metal is forecasted to address a swiftly expanding market that’s projected to exceed $100 billion by 2032. The combined entity will serve the entire manufacturing lifecycle – a feat comparable to a Swiss Army knife with a tool for every job, from designing to prototyping, tooling to mass production, and aftermarket operations.
The revenue mix of the combined entity is expected to shift towards high-growth verticals across a broad product portfolio, promising over half of the pro forma combined company’s revenue to stem from end-use parts manufacturing and mass production. This segment will be a leader in additive manufacturing, with a CAGR of over 29% from now until 2027.
In the words of Fulop, “We’re going to build an even more resilient offering with a diversified customer base across industries and applications to drive long-term sustainable growth.” This commitment, akin to constructing a resilient fortress capable of withstanding the challenges and fluctuations of market dynamics, signifies a positive future for the stakeholders of both companies, according to Fulop.
This merger of two titans of the industry promises to produce a suite of complementary and expansive offerings that will create waves in additive manufacturing. With Desktop Metal’s expansion into mass production across a wide range of materials – including metals, polymers, ceramics, sand, carbon fiber, and wood – the new entity will position itself at the forefront of innovation.
Fulop also highlighted the potential for growth in dental restorative mass production, emphasizing the company’s strategic partnerships, leading materials, and world-class team. The $35 billion potential growth in dental mass-production makes this a promising industry.
There are also significant opportunities in metals, carbides, ceramics, and other materials. “We have the industry’s leading global position in binder jet. That’s the fastest 3D printing process for materials like metals, technical ceramics, and carbides, and we have the largest and growing customer base in this segment, with over 1,200 customers,” Fulop added. This puts the company in the lead for high-volume, mass production of metal additive manufacturing.
The combined entity’s capabilities aren’t limited to production; they extend to distribution as well. Stratasys and Desktop Metal’s union will offer significant benefits for stakeholders, thanks to an extensive global go-to-market network, enhanced market access, and globally recognized brands. The global footprint is supported with more than 400 engineers and support staff, providing a solid customer support structure.
Fulop noted the powerful combined R&D engine driving innovation, stating, “Together, our companies invested nearly half a billion dollars in cumulative R&D spend in the past four years. That’s a significant investment for innovation, and it’s going to remain a key area for us going forward.”
He concluded, “As a combined company, we’re going to have one of the largest and most experienced R&D and engineering teams in this entire industry,” setting the stage for an era of rapid innovation and potential market disruption in the additive manufacturing industry.
Yoav Zif, CEO of Stratasys and Ric Fukop, CEO of Desktop Metal, discussed the financial benefits that the merger would bring to their companies. The two companies projected $50 million of annual cost synergies through 2025. This was possible by optimizing sourcing strategies, improving technology infrastructure and consolidating shared internal infrastructures.
The CEOs gave a promising outlook on the financial side, predicting that combined revenue of $1.1 billion by 2025 will be generated with an EBITDA adjusted margin of 10% to 12%. This merger has the potential to create an enterprise with significant cash reserves, increasing its ability to fuel growth in the future.
Both leaders were confident that the merger will be beneficial for their employees, customers, and shareholders as the conversation progressed. This merger is seen to be a way of capturing the value additive manufacturing (AM), for mass production. It also fosters cost and revenue synergies and establishes an attractive financial profile.
When asked about the broader impact of the merger on the additive industry, Zeif emphasized that this merger is about “transformation” and “reshaping the industry.” He argued that the current additive manufacturing industry lacks the ability to deliver quality, cost-effective parts, and real workflow. With the merger of Stratasys with Desktop Metal, these issues can be addressed.
They were confident in the possibilities for sharing technology and collaborating across their teams. They highlighted the possibility of advancing software and material technologies. The call ended with a reaffirmation of their excitement for the merger. They saw it as a chance for improved innovation and go-to market strategies.
The merger between Stratasys Desktop Metal and Stratasys is expected to bring significant benefits not only for both companies, but also the entire additive manufacturing sector. The merger of resources and abilities promises to address industry deficiencies, promote innovation and drive significant growth over the next few years. The plans for this merger will progress and all eyes on this transformational move in the sector of additive manufacturing.
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