Acquisitions, Mergers & PartnershipsAM Industry

Nano Dimension acquires Desktop Metal in all-cash transaction of $185M-$135M

Forming a well-capitalized combined company with 2023 revenue of $246M, 28% from recurring revenue

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So that’s how it ends. The saga that kept the AM industry glued to the newsfeeds for the better part of last year came to its – in retrospect – most logical conclusion. No Stratasys-Desktop Metal or Nano Dimension-Stratasys mergers and no 3D Systems-Stratasys acquisition: instead, Nano Dimension is acquiring Desktop Metal for $135 million (one could say that it’s a steal) and will be using the remaining 1+ billion dollars in cash that it’s sitting on to build the new company into a powerful competitor in the AM landscape. Or not. One thing we’ve learned is that there are no guarantees.

Nano Dimension CEO, Yoav Stern

This means that the new group will be able to offer material jetting electronics 3D printing (AME) via the Nano Dimension’s original Dragonfly systems, ceramics stereolithography via Adamtec and ceramics and sand binder jetting via ExOne, micro stereolithography via Fabrica Group and DLP stereolithography via ETEC, as well as metal binder jetting and bound metal filament printing via Desktop Metal, with bound metal stereolithography also via Adamtec. Oh and bioprinting via Desktop Health’s 3D bioplotter. Plus materials and services. Not a bad combination of products.

Yoav Stern, Nano Dimension’s Chief Executive Officer and member of the Board of Directors, said, “Our combination with Desktop Metal is another step in Nano Dimension’s evolution to become the leader in digital manufacturing, with capabilities in mass manufacturing for critical industrial applications. We’re excited to join forces with an excellent group of technology leaders, all of whom share our vision for transforming manufacturing to Digital Industry 4.0. I look forward to working with Ric Fulop and his team to drive value for all our stakeholders, including creating opportunities for our employees as part of a larger, more diversified global innovative company, driving customer support and generating long-term growing value for shareholders as we focus on profitable growth.”

Ric Fulop, Co-founder and CEO of Desktop Metal

Ric Fulop, Desktop Metal’s Co-Founder and Chief Executive Officer, said, “We’re excited to bring together our pioneering, complementary product portfolios that will further enhance our ability to serve our customers in high-growth industries with a more complete offering of digital manufacturing technologies for metal, electronics, casting, polymer, micro-polymer and ceramics applications. We look forward to working with Nano Dimension to join two great companies and their devoted teams that can serve our stakeholders to the maximum extent possible.”

Under the definitive agreement, Nano Dimension will acquire all outstanding shares of Desktop Metal in an all-cash transaction for $5.50 per share, subject to possible downward adjustments to $4.07 per share, as described below. At $5.50 per share, the transaction represents a 27.3% premium to Desktop Metal’s closing price and a 20.5% premium to the 30-day VWAP as of July 2, 2024, for total consideration of approximately $183 million, possibly down to $4.07 per share or $135 million in total.

Why do we say that this merger is the most logical conclusion? Well, out of all the contenders, Nano Dimension had the biggest cash reserves and Dekstop Metal probably had the most need of cash. In addition, Nano Dimension looked to acquire some of the companies (EnvisionTEC, ExOne) that Desktop Metal acquired after raising cash by going public via a SPAC merger. Furthermore, among all the leadership teams involved in this merger saga, Fulop’s and Stern’s run the ones who move faster and are more willing to take risks. It is a bit surprising that it took this long but it is also a matter of making the two companies – and management – coexist.

Strategic and financial benefits of the Nano Dimension Desktop Metal combination

The transaction combines the strengths of each company across varied end applications, Additive Manufacturing (AM) technologies and material coverage to create the broadest product portfolio across metal, electronics, casting, polymer, micro-polymer and ceramics. Nano is a known leader in 3D printed electronics and high-performance polymer, ceramic and metal applications, with a robust software platform driven by DeepCube’s deep learning-based AI, while Desktop Metal maintains platforms focused on industrial-volume scale applications of metal and polymer with proprietary materials, software, and sintering solutions.

The union of the two companies will ideally create a leader in 3D printing innovative solutions that drive the transition from prototyping to mainstream tooling and end-use part production, which has been the stated goal of both companies from the start. The combined company will be the first AM provider covering the full gamut of customer needs from prototyping to production across a range of critical and high-performance medical and electronics applications in industrial and high-performance materials.

Nano Dimension acquires Desktop Metal in all-cash transaction of $135M forming a combined company with 2023 revenue of $246M
The X160Pro from ExOne, beautifully rebranded by Desktop Metal, is the most proven binder jetting production system for direct part production on the market today.

The combined company is expected to be able to expand opportunities to cross-sell to its existing customers as well as to grow its overall customer base with optimized customer acquisition capabilities and joint go-to-market strategies, including targeting customers with complementary offerings in shared key markets in the automotive, aerospace/defense, industrial, medical and R&D/academia industries. Together, the combined company will serve a range of industry verticals with blue-chip customers including Amazon, Caterpillar, Fraunhofer Institute, NASA, Raytheon, REHAU, Tesla, Thermo Fisher Scientific, Toyota, the US Army and more.

Nano Dimension acquires Desktop Metal in all-cash transaction of $135M forming a combined company with 2023 revenue of $246M
Nano Dimension’s DragonFly IV.

Together, Nano Dimension’s and Desktop Metal’s portfolio will be focused on high-tech solutions that generate premium margins and are supported by an installed machine base of over 8,000 systems, representing significant opportunities for recurring revenue generation from larger services and consumables offering. The combined company will benefit from significantly enhanced scale and a diversified profile with 2023 combined revenue of $246 million, of which 28% was generated by recurring revenue streams from the services and consumables. The combined company’s complementary expertise and leadership in solutions for mass production will create an AM company that has a record of delivering solutions for manufacturing at high volumes.

The combination will enable the pooling of resources in administration, sales, marketing and R&D and generate efficiencies and cost savings opportunities while enhancing R&D and innovation capabilities. This combination is anticipated to generate more than $30 million in run-rate synergies over the next few years, in addition to previously announced cost savings from each of the two organizations. We believe business operations and capabilities will provide for consolidation opportunities as the combined company focuses on core geographies, including offices, R&D and manufacturing facilities in multiple U.S. locations, UK, Germany, Switzerland Netherlands, Italy, Israel and APAC.

It will be interesting to see what kind of effect this merger will have on the newco’s stock price. Shares of both companies have been tumbling but Desktop Metal’s have been tumbling more than Nano Dimension’s. They are not the only ones. Stratasys’ and 3D Systems’ share prices have been freefalling near record lows. If the stock market reacts positively to this merger, perhaps they will be next to pick the conversation back up?

Developing story

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