Nano Dimension acquires 12.12% stake in Stratasys Ltd.
Here is why it's not the other way around
Nano Dimension Ltd. (Nasdaq: NNDM) continues to shock the AM market with strategic acquisitions. After Nano Fabrica (now Fabrica Group) and more recently Adamtec/Formatec, the company has completed a strategic acquisition of 12.12% of additive manufacturing market leader Stratasys. Having visited Nano Dimension when it was just a two-story office with R&D capabilities in a building near Rehovot, Israel, only a few years ago, this achievement is all the more impressive.
Why is it that a relative newcomer in additive manufacturing (Nano Dimension has been around for some time but has sold only a few systems worldwide to date, compared to several tens of thousands sold by Stratasys) has the power to buy stakes in a consolidated player and not the other way around? A lot of it has to do with the promise of scalability. Investors are looking at AM as a way to truly scale digital manufacturing. They have put their money on Stratasys and 3D Systems in the past (and will do so again) but the companies has so far failed to deliver on true digital mass production. So now investors are looking for new companies to enable that transition.
It happened with Desktop Metal: led by the vision of additive manufacturing 2.0, the company raised significant capital after successfully going public via SPAC and used that capital to acquire AM companies with consolidated technologies, such as EnvisionTEC (ETEC) and ExOne. These are now part of a group that is working together on developing synergies to scale their combined production capabilities.
The path undertaken by Nano Dimension is somewhat similar and based on the promise of scaling the production of electronics at a time when supply chains in electronic parts and components are heavily disrupted. After a very successful run on the Nasdaq, Nano Dimension emerged as the industry leader in direct electronics 3D printing, which it refers to as Additively Manufactured Electronics (AME), and a highly specialized AM Manufacturing company.
These capabilities will now be significantly enhanced with the powerful synergies that can be generated with Stratasys and its market-leading technologies (FDM, PolyJet) as well as its own investments in pioneering technologies and processes such as SAF, Origin’s PPP and RPS’s SLA, targeted at scaling digital additive manufacturing.
With $521 million and $607 million of revenue in 2020 and 2021, respectively, Stratasys is a de facto leader in the global shift to AM through smart and connected 3D printers, polymer materials, a software ecosystem and parts on demand. Stratasys serves customers worldwide by transforming product design, bringing agility to manufacturing and supply chains, and improving patient care.
Yoav Stern, Chairman and Chief Executive Officer of Nano Dimension, commented: “The purpose of Nano Dimension in buying Stratasys shares is the formation of a strategic investment in a market-leader which is well established in a relatively seasoned market segment, while Nano Dimension’s disruptive technologies in AME and 3D metal printing supply its shareholders with value created by accelerated growth and expansion curves. Hence, an investor in Nano Dimension will gain from its value creation in “blue ocean” type AM sectors plus having strategic upside from investment in Stratasys, which enjoys a commanding presence in large, stable more mature, mostly polymer-based AM technologies. In contrast, Nano Dimension’s material development thrusts and business model strategy are centered around metals with electro-mechanical conductive parameters, metals with superior mechanical qualities, dielectric material, and printing of multi-dimensional-electronic devices and mechanical parts.
“Incidentally,” Mr. Stern concluded, “We may increase or decrease our investment in Stratasys, subject to market conditions and other economic factors, while keeping it under the framework and envelop which will evolve from the description above.”