What Nano Dimension’s acquisition of Desktop Metal means for the AM industry

In a move that has captivated the additive manufacturing industry, Nano Dimension’s acquisition of Desktop Metal represents a significant reshaping of the digital manufacturing landscape. VoxelMatters recently spoke with the CEOs of both these companies – Yoav Stern of Nano Dimension and Ric Fulop of Desktop Metal – about the rationale behind this acquisition, the state of the industry, and the implications of the merger.

The rationale

During our conversation, Ric shared some thoughts on why a phase of consolidation within the AM industry was inevitable: “Our industry badly needs consolidation. We don’t have a single player that’s really, truly profitable or cash-flowing at the moment.” He emphasized that scaling operations to spread costs, particularly fixed and overhead costs, across a larger revenue base, is essential for profitability and sustainability.

Yoav echoed these sentiments, noting the fragmented nature of the industry: “The industry has about four to five billion dollars [worth] of players that actually invent, research, and produce the technologies that the rest of the ten billion dollar industry is using.” Both CEOs recognized that merging their companies would address the industry’s need for a unified, profitable, and scalable operation.

Complementary technologies

The merger between Nano Dimension and Desktop Metal is not just about increasing scale but also about creating a complementary suite of technologies. “We don’t have overlapping products in our portfolio; we are totally complementary,” noted Ric. This fit allows the combined entity to offer a diverse range of products and services.

Both companies employ inkjet printheads for material jetting in electronics 3D printing (AME), via Nano’s Dragonfly systems, as well as for binder jetting sand, metal, and ceramics at Desktop Metal and its ExOne brand. Nano’s Admatec unit uses DLP for printing loaded ceramic and metal parts for sintering that could integrate well with Desktop Metal’s existing sinter-based portfolio. Desktop Metal also owns a significant DLP enterprise through its ETEC and Desktop Health brands that Nano Dimension’s Fabrica Group would integrate well within.

This comprehensive portfolio positions the new, yet-to-be-named entity as a formidable player in the AM market. Yoav emphasized the importance of selecting the right technologies and markets: “You have to build something that combines creativity and innovation with the right target markets and business model.” The acquisition aims to create a powerhouse capable of addressing various high-growth industries’ needs – from metals and electronics to polymers and ceramics.

Perspectives on industry consolidation

Ric described the necessity of consolidation in the AM industry as a natural cycle, essential for building a thriving industry. “You need to get something to scale. We don’t have a single company in AM that’s at a billion dollars in revenue yet,” he said. Consolidation is seen as a critical step towards achieving this scale – making the industry more competitive and capable of driving innovation and profitability.

Yoav, on the other hand, stressed the importance of strategic mergers over mere roll-ups: “It’s not a matter of just rolling up companies and banging them together. It’s a matter of carefully picking and choosing who can be a leader in this industry as the industry evolves into its next phase beyond prototyping.”

AM industry implications

The merger has far-reaching implications for the AM industry. Firstly, it sets a precedent for further consolidation – encouraging other companies to seek similar strategic partnerships to remain competitive. Secondly, it enhances the technological capabilities and market reach of the combined entity – enabling it to offer a broader range of solutions to customers.

Ric noted the market’s positive reaction to the merger, with both companies’ shares experiencing a significant jump: “Both shares the day after responded in a very unusual manner, with a very extreme jump of close to 20%.” This positive market response indicates investor confidence in the merger’s potential to drive growth and profitability.

Technological synergies and R&D

One of the most promising aspects of the merger is the potential for technological synergies. “Nano Dimension is best in the world at inkjet electronics, and Desktop Metal excels at formulating photopolymers,” highlighted Ric, regarding the complementary nature of the two companies’ technologies. Combining these strengths is expected to lead to innovative new products and solutions that neither company could have developed independently.

In terms of R&D, both CEOs are keen on fostering collaboration and the cross-pollination of ideas. “There’s nothing to compare to R&D being under one roof because of the amount of cross-pollination and creativity around the coffee corner,” said Yoav, when talking about his ‘ideal scenario’. While practical constraints may prevent a complete unification of R&D teams, the goal is to create centers of excellence that facilitate collaboration and innovation.

Integration and future plans

Integrating the two companies involves more than just merging technologies; it also requires careful planning and execution to ensure seamless operations. “We will eliminate multiple locations to improve efficiency and reduce costs,” noted Yoav. The CEOs plan to consolidate operations in key locations – such as Boston, which will be home to the headquarters – while maintaining centers of excellence in areas like Switzerland, Cambridge UK, Netherlands, Israel, Munich, and some other locations in the USA.

When asked about the new entity’s brand name and structure, Yoav noted that: “Branding is not a science; it’s an art. We are considering going for one brand, because if you build one company and you want to have one team – you want to have the spirit of the team and you want to have the market recognize the size and the uniqueness of your brand. You can’t mix the market with too many brands.”

As the AM industry continues to evolve, this merger sets a benchmark for overall consolidation – demonstrating how complementary technologies and careful company pairings can create powerhouses capable of leading the market. What we are seeing now is likely only the tip of the iceberg.