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Essentium to go public via merger with Atlantic Coastal

Next "soonicorn" in for the SPAC craze, with transaction worth $974 million

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Essentium, a Texas-based manufacturer of industrial additive manufacturing (AM) solutions, has entered into a definitive business combination agreement with SPAC company Atlantic Coastal Acquisition Corporation (NASDAQ: ACAH). Upon completion of the SPAC merger transaction, which is expected to occur around the end of the first quarter of 2022, the combined company will retain the Essentium name and is expected to be traded on The Nasdaq Stock Market, under the new ticker symbol “ADTV”.

The proposed SPAC business combination values the combined company at a $974 million pro forma enterprise value, at a price of $10.00 per share and assuming no redemptions by Atlantic Coastal shareholders, offering an attractive valuation of 4.6x Essentium’s projected 2023E Revenue of $212 million. The proposed transaction is expected to deliver up to $346 million of net proceeds to the Company, assuming no redemptions and net of transaction expenses, including a fully committed common stock PIPE of over $40 million at $10.00 per share led by institutional and strategic investors including BASF, Atalaya and Apeiron. Atlantic Coastal’s management team is also contributing $20 million to the PIPE.

Founded in 2013, Essentium is an advanced manufacturing ecosystem provider that develops industrial 3D printing solutions across systems, materials, software, and services to enable a new distributed and sustainable manufacturing footprint. The Company’s ecosystem cost-effectively addresses full-scale production runs, producing parts that can match the strength of injection molding at a very low total cost of ownership (“TCO”) compared to industry peers. Essentium’s ability to create high-quality parts using best-in-class printing speeds, all while maintaining a disruptive TCO, has enabled the Company to unlock substantial value for additive manufacturing applications.

“Essentium is transforming the future landscape of supply chains by delivering truly distributed, sustainable manufacturing and operating solutions within all contexts including the ability to operate successfully in contested logistics environments,” said Blake Teipel, Ph.D., Chief Executive Officer of Essentium. “Fundamental deficits in our existing global supply chain models are being exacerbated by escalating obstacles such as trade imbalances and the global pandemic – all leading to protracted distribution bottlenecks. Today’s announcement represents a major milestone in our efforts to provide long-term, sustainable solutions for a new manufacturing paradigm that can meet these global challenges head-on. Essentium’s solution deploys regional, distributed production capabilities to enable supply chain transparency, and flexible inventory management at a highly competitive TCO, all while reducing waste and supporting a limited carbon footprint through on-site printing.”

Essentium to go public via merger with Atlantic Coastal, next "soonicorn" in for the SPAC craze, with transaction worth $974 million

“We launched Atlantic Coastal with an ESG-centric focus and a mandate to partner with a company that will transform the nature of international commerce, and we believe that Essentium, with its potential to change the global supply chain, is exactly that partner,” said Shahraab Ahmad, Chairman and Chief Executive Officer of Atlantic Coastal. “Blake and his experienced team have developed a deep technology moat, a product ecosystem validated by the DoD, and a razor/razor-blade model that delivers significant recurring revenue, supporting gross margin expansion and highly attractive unit economics.”

Essentium manufactures a line of High-Speed Extrusion (HSE) 3D Printing Platforms, which are reportedly 5 to 15 times faster compared to incumbent extrusion additive manufacturing systems; Essentium’s transformational data capture abilities enable real-time capture of critical parameters via high-fidelity data streams at a rate that is on average 14 times faster per variable than traditional additive manufacturing.

“We believe that following this transaction, Essentium will be extremely well-positioned for rapid growth as it further expands its ecosystem offerings, capitalizes on its line-of-sight sales pipeline, and executes on its M&A strategy as it continues to advance additive manufacturing as a public company,” said Tony Eisenberg, Chief Strategy Officer of Atlantic Coastal Acquisition Corp.

Essentium currently serves a $209 billion TAM by meeting a range of commercial and mission-critical use cases for its global machine tooling, jigs, fixtures, and thermoplastics offering, as well as relevant DoD applications. Its customer base includes the U.S. DoD, Lockheed Martin Corporation and Ford Motor Company, among other aerospace and defense, government, and blue-chip industrial customers
Extensive IP portfolio across polymer and metal systems, processes, and materials, with more than 150 patents to date.

The company also boasts an experienced management team with material science and supply chain backgrounds, which enables it to continue to innovate beyond its lineup of polymer- and polymer-composite solutions, including its FlashFuse technology. Essentium is currently developing a suite of metal-additive systems designed to offer unique metallurgies and advanced microstructures for applications with demanding structural integrity. Essentium’s investment in metal additive solutions and new investment in digital manufacturing initiatives is expected to carve out incremental market opportunities for an all-in estimated $318 billion TAM.

Following the closing of the proposed SPAC transaction, Essentium will continue to be led by its existing management team including Dr. Blake Teipel, Chief Operating Officer Lars Uffhausen, and Interim Chief Financial Officer Jonathan Bailiff, and by an experienced Board of Directors including Burt Jordan, President of Atlantic Coastal Acquisition Corp. and a former executive at Ford.

SPAC company Atlantic Coastal and ACM ARRT VII C LLC, an affiliate of Atalaya, have agreed to conduct a joint tender offer for the shares held by Atlantic Coastal stockholders seeking to exercise redemption rights in connection with the closing of the proposed transaction. Subject to certain limitations, Atalaya has agreed to purchase the first 10 million shares tendered by stockholders exercising such redemption rights, while Atlantic Coastal will purchase any shares in excess of 10 million shares tendered for redemption.

To the extent that the number of shares tendered by stockholders exercising redemption rights is fewer than 10 million shares, then (a) Atalaya will purchase any shares tendered by stockholders exercising redemption rights plus (b) Atalaya will purchase shares in a PIPE at $10.00 per share in an amount equal to the difference between 10 million shares minus the number of shares purchased by Atalaya in the tender offer. Subject to early settlement or termination under certain circumstances, Atlantic Coastal has agreed to purchase all of the shares acquired by Atalaya in the joint tender offer or PIPE at the redemption price pursuant to a forward purchase agreement, which provides for the purchase of such shares by SPAC Atlantic Coastal along with the related settlement of such forward purchase in cash or shares, at Atalaya’s election, occurring two years thereafter.

The boards of directors of both Essentium and Atlantic Coastal have each unanimously approved the proposed business combination, which is expected to be completed around the end of the first quarter of 2022, subject to, among other things, the approval by Atlantic Coastal’s shareholders of the proposed business combination, the concurrent PIPE transaction, satisfaction of the conditions stated in the definitive agreement and other customary closing conditions, including a registration statement on Form S-4 being declared effective by the U.S. Securities and Exchange Commission (the “SEC”), the receipt of certain regulatory approvals, and approval by Nasdaq to list the securities of the combined company.

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