So, after the initial leak following an investor meeting a couple of weeks ago, which was followed by numerous rumours and rather a lot of speculation (ours included), the news comes through that yes indeed, Stratasys and Makerbot ARE joining forces. Both companies have released the information, with a live press conference slated for tomorrow morning (EST) at Makerbot’s HQ. I’d love nothing more than to hop on a plane and be there, believe me, but the notice is a tad short and life (well mine anyway) is not conducive to such a trip.
The corporate PR denotes “a definitive merger agreement whereby privately held MakerBot has agreed to merge with a subsidiary of Stratasys in a stock-for-stock transaction. MakerBot, founded in 2009, helped develop the desktop 3D printing market and has built the largest installed base of 3D printers in the category by making 3D printers highly accessible. The company has sold more than 22,000 3D printers since 2009. In the last nine months, the MakerBot Replicator 2 Desktop 3D Printer accounted for 11,000 of those sales.”
As Mike commented in his speculation article, Stratasys has made it known recently — from the top down (Elan, David Reis and Andy Middleton have all gone on the record) — that they see prosumer/consumer 3D printers in their future strategy — and what better way to do it than with the current undisputed market leader. The bonus is that there is a real synergy between the Stratasys FDM tech (with lots of IP/patents) and the Makerbot extrusion process born of RepRap technology. There will be changes and improvements afoot. The press release states: “Upon completion of the merger, Stratasys and MakerBot will jointly develop and implement strategies for building on their complementary strengths, intellectual property and technical know-how, and other unique assets and capabilities. The opportunities could include accelerating MakerBot’s reach by leveraging Stratasys’ global infrastructure; cross-promotion of products into the installed base of the combined companies; and leveraging Stratasys’ extensive know-how in Fused Deposition Modeling (FDM) to benefit MakerBot’s product line.”
Probably shouldn’t project speculation into a news post, but hey, going to anyway. (What a rebel!) I predict the Rep3 by the end of the year, likely with some sort of heated chamber and support material capability. And then, my friends, this thing could seriously go wild!! The 11,000 unit sales of the Rep2 that the PR is quoting since its launch will seem paltry in comparison. The result will probably mean cannibalizing Mojo up to a point, but that system never really hit the mark — because it never quite knew who it was targeting — and I don’t believe it will be that negative an effect.
So, back to the corporate speak and the party line is that: “the combination of these two industry leaders is expected to drive faster adoption of 3D printing for multiple applications and industries ….. Upon completion of the transaction, MakerBot will operate as a separate subsidiary of Stratasys, maintaining its own identity, products and go-to-market strategy.”
Well the first bit is a given, had to be said I suppose. The second is a good move IMO. What makes Makerbot so strong and so valuable is its combination of a great brand, second only to a fantastic community. With this deal, Makerbot (with Stratasys power) has a unique opportunity to manufacture a product worthy of both in its new New York factory, which could well need some further expansion work and scale up in the next 12 months. Plus, it is probably a very good idea to keep Makerbot out of the Stratasys / Objet convergence, which is still ongoing.
I would love to know what Adrian Bowyer thinks of this deal – as a Makerbot shareholder, he was likely privy to the deal a while ago. But it is about as far from his original vision of RepRap as one can get.
This is certainly huge news for the 3D printing industry. It only broke an hour or so ago, so how it plays out in full is yet to unfold.
Exciting!
For anyone interested in the facts and figures of the deal, the details from the press release are below — but they’re not as exciting!!
Transaction Details
Under the terms of the merger agreement, Stratasys will initially issue approximately 4.76 million shares in exchange for 100% of the outstanding capital stock of MakerBot. The proposed merger has an initial value of $403 million based on Stratasys’ closing stock price of $84.60 as of June 19, 2013. MakerBot stakeholders also qualify for performance-based earn-outs that provide for the issue of up to an additional 2.38 million shares through the end of 2014. The proposed earn-out payments have an initial value of up to $201 million based on the Stratasys closing stock price as of June 19, 2013. Those payments, if earned, will be made in Stratasys shares or cash (in an amount reflecting the value of the Stratasys shares that would have otherwise been issued at the relevant earn out determination date), or a combination thereof, at Stratasys’ discretion. The merger is expected to accelerate Stratasys’ growth rate and be slightly dilutive to Non-GAAP earnings per share in 2013, and accretive to Stratasys’ Non-GAAP earnings per share by the end of 2014.
