Groupe Gorgé announces “now not the right time to sell Prodways” amid restructuring plans

French engineering firm Groupe Gorgé (GOE) has confirmed that it has no intention of selling shares in its 3D printing subsidiary Prodways (PWG), despite unveiling fresh plans to simplify its corporate structure. 

Aiming to establish itself solely as a manufacturer of autonomous robotics and related systems, Groupe Gorgé has spent the last three years divesting parts of its business that don’t align with this goal. However, when it comes to Prodways, the firm has hatched a plan to deconsolidate the company instead, as a means of streamlining its organization, while capitalizing on its subsidiary’s projected growth.

Since news of Groupe Gorgé’s restructuring proposal broke, the firm’s share price has risen 3% to its highest level in over a month, while Prodways’ shares went the other way, falling 7% from a year-high of €3.33 to €3.09. 

“Now is not the right time to sell Prodways,” Groupe Gorgé’s CEO Raphaël Gorgé said on a conference call dedicated to the restructuring. “These changes allow us to simplify the organization of Groupe Gorgé, and on the other side, keep hold of all the potential growth in Prodways’ shares for Groupe Gorgé’s shareholders.” 

Closeup of Prodways 3D printer. Photo via Prodways
Groupe Gorgé’s plans will see Prodways become separated from its core business. Photo via Prodways.

Groupe Gorgé’s AM venture

Founded in 2013 as Groupe Gorgé’s dedicated 3D printing division, Prodways markets its P1000 SLS and LD Series of DLP 3D printers, as well as related QC, R&D services and polymeric materials. Prodways’ dual offering has allowed it to address sectors ranging from automotive and aerospace to the dental industry, and it continues to add to its portfolio as a means of broadening its customer appeal. 

In October last year, the company upgraded its MOVINGLight ProMaker range, with the introduction of its 3D Super-Resolution tech, which improved the rendering abilities of LD Series units beyond their native resolution of 42µm. More recently, the firm has also begun marketing Oqton AI software with its systems, enabling its adopters to use algorithms to continuously improve their production efficiency. 

These advances now appear to be paying dividends, with Prodways striking a sales deal with the Straumann Group earlier this year, and its overall revenue rising 54% in Q2 2021. Based on this strong H1 performance, and its subsidiary’s upcoming next-gen ‘Futur3D’ products, Groupe Gorgé has therefore opted to keep its majority share in Prodways, to take advantage of an anticipated growth in its valuation. 

“We think that there’s still a nice potential to the shares of Prodways,” Gorgé added on Groupe Gorgé’s conference call. “We are particularly proud of its H1 financial performance, and this is why we chose to adopt such a complex solution.”

A batch of Prodways 3D printed dental aligners.
Prodways’ dental and materials offerings performed well during H1 2021, driving its wider revenue recovery. Image via Prodways.

Reorganizing rather than divesting 

Since 2018, Groupe Gorgé has embarked upon a refocusing initiative that has seen it sell part of its Engineering & Protection Systems division, including the AI Group, CIMLEC and VanDam. The company has done so with the ambition of streamlining its business into two divisions: Engineering & Protection Systems and Drones & Systems, with the latter making 60% of its sales and 90% of its total orders. 

In doing so, Groupe Gorgé says that it aims to establish itself as “one of the world leaders in the field of autonomous robotics,” and the strategy could enable it to seize consolidation opportunities in the sector. The firm also believes that its restructuring will provide it with an improved readability and market profile, as it has been “penalized for many years by the diversity of its activities.”

Taking its restructuring a step further, the company has now announced that it intends to deconsolidate Prodways, by distributing most of its shares in its subsidiary to shareholders. At present, Groupe Gorgé holds 56% (or € 95 million worth) of shares in the 3D printer manufacturer, thus the move could see the amount of Prodways shares listed on the public market rise from 34% to 60%. 

If approved, Groupe Gorgé says the rejig will raise €80 million for shareholders and €55 million for it to plough back into its Drones & Systems division, while allowing Prodways to “raise capital to seize growth opportunities and forge development partnerships.”

The deal would also see the Gorgé family remain Prodways’ leading shareholder, but current CEO Raphaël Gorgé stepping down, with a recruitment process for a new Managing Director already underway. While the move has been approved by Groupe Gorgé’s Board of Directors, it’s still subject to shareholder approval at a Combined General Meeting, which is scheduled to take place on December 14, 2021. 

3D Systems has seen its revenues drop by 28 percent in Q2 2020 when compared to Q2 2019. Photo via 3D Systems.
Groupe Gorgé’s refocusing initiative coincides that with 3D Systems, which has recently realigned its verticals. Photo via 3D Systems.

3D printing’s divestiture drives 

Due in part to the disruption caused by COVID-19, a number of other 3D printing firms have also sought to consolidate their businesses and chase profitability over the last 18 months. One of the industry’s highest-profile restructurings has been 3D Systems’, which has seen it sell the likes of Battery Ventures, Cimatron, Simbionix and Quickparts, to buy Oqton for $180 million, as well as Allevi and Additive Works

Likewise, at the height of the pandemic last year, Stratasys was forced to cut 10% of its workforce, as part of its plan to operate on a ‘leaner’ business model. At the time, the firm’s CEO Yoav Zeif, said the move was a “difficult but essential step in its ongoing strategic process, designed to better position it for sustainable and profitable growth.”

On the flipside, Desktop Metal’s ExOne acquisition reflects a more aggressive form of market consolidation, which is set to see the sector’s two biggest binder jetting firms merge into a single entity. Scheduled to conclude in Q4 2021, the deal will see Desktop Metal pay ExOne shareholders $192 million in cash and $383 million in shares, for full control of what was one of its major industry rivals. 

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Featured image shows a close-up of a Prodways 3D printer. Photo via Prodways.