Stratasys and Desktop Metal announce merger and it is valued at $1.8 Billion. This is a high-profile coming together of industry leading companies and results in the creation of the most comprehensive industrial 3D printing portfolio seen in the industry till date.
Stratasys Ltd., an American-Israeli 3D printing OEM, and Desktop Metal, Inc., a world leader in mass production additive manufacturing technologies, announced that they have signed a binding agreement to merge their businesses in an all-stock deal valued at about $1.8 billion.
The acquisition creates an additive manufacturing business that is anticipated to be well-positioned to meet the changing needs of customers in the manufacturing industry by combining the polymer strengths of Stratasys with the complementary industrial mass production leadership of Desktop Metal’s brands.
Stratasys and Desktop Metal announce Merger
With significant upside potential in a total addressable market of more than $100 billion by 2032, Stratasys and Desktop Metal are anticipated to generate $1.1 billion in revenue by 2025.
The shareholders of Desktop Metal will receive 0.123 ordinary shares of Stratasys for each share of Desktop Metal Class A common stock, in accordance with the terms of the agreement, which has been unanimously approved by the Boards of Directors of both companies. Using the closing price of a Stratasys common share of $15.26 on May 23, 2023, this translates into a value of about $1.88 per share of Desktop Metal Class A common stock.
Existing Stratasys shareholders will own roughly 59% of the combined company after the merger closes, which is anticipated to take place in the fourth quarter of 2023, and legacy Desktop Metal stockholders will own roughly 41% of the combined company, in each case on a fully diluted basis.
“Today is an important day in Stratasys’ evolution. The combination with Desktop Metal will accelerate our growth trajectory by uniting two leaders to create a premier global provider of industrial additive manufacturing solutions. With attractive positions across complementary product offerings, including aerospace, automotive, consumer products, healthcare and dental, as well as one of the largest and most experienced R&D teams, industry-leading go-to-market infrastructure and a robust balance sheet, the combined company will be committed to delivering ongoing innovation while providing outstanding service to customers.”
– Dr. Yoav Zeif, CEO of Stratasys
Dr. Zeif added, “We look forward to building on the complementary strengths of the combined business and leveraging the strong brand equity across the portfolio to deliver enhanced value to shareholders, customers and employees.”
“We believe this is a landmark moment for the additive manufacturing industry. The combination of these two great companies marks a turning point in driving the next phase of additive manufacturing for mass production. We are excited to complement our portfolio of production metal, sand, ceramic and dental 3D printing solutions with Stratasys’ polymer offerings.”
– Ric Fulop, Co-founder, Chairman and CEO of Desktop Metal
Fulop added, “Together, we will strive to build an even more resilient offering with a diversified customer base across industries and applications in order to drive long-term sustainable growth. We look forward to combining with Stratasys to deliver profitability while driving further innovation for a larger customer base and providing expanded opportunities for our employees.”
Compelling Strategic and Financial Benefits of the Transaction
Combined Company Creates Greater Opportunities for Growth: The merger creates a large additive manufacturing company with the goal of achieving $1.1 billion in revenue by 2025, benefiting from the projected industry growth.
Brings Together Complementary Portfolios: The combination of Stratasys and Desktop Metal brings together diverse additive manufacturing platforms, offering a wide range of solutions for customers, particularly in end-use parts manufacturing and mass production.
Unites Robust Innovation and Technology Expertise: The merger combines the intellectual property and research and development efforts of both companies, resulting in a significant innovation and technology expertise, supported by a substantial team of over 800 scientists and engineers.
Diversifies Customer Base Across Industries and Applications: By integrating complementary products and technologies, the combined company diversifies its customer base across various industries, strengthening its market presence and customer support capabilities.
Creates Opportunities for Meaningful Synergies: The merger is expected to generate cost synergies and revenue growth, leading to increased financial strength and aiming for 10%-12% adjusted EBITDA margins by 2025. It is expected to generate approximately $50 million in additional annual run-rate cost synergies by 2025.
Increases Financial Strength: The combined company will have a solid financial position, leveraging its cash and equivalents to support future growth initiatives.
Leadership and Governance
Following the transaction’s completion, Mr. Fulop will serve as Chairman of the Board and Dr. Zeif will serve as the combined company’s Chief Executive Officer. The combined company’s Board of Directors will have 11 members after the transaction is complete, including Dr Zeif as CEO and five members chosen by Stratasys and five chosen by Desktop Metal. Dov Ofer, the chairman of Stratasys, will be the company’s principal independent director.
