SPAC IPO surge continues with Fathom set to go public in $1.5 BN merger

On-demand manufacturing service provider Fathom Digital Manufacturing has revealed that it intends to go public via a merger with Special Purpose Acquisition Company (SPAC) Altimar Acquisition Corp. II (ATMR). 

Through the deal, the HPS Investment Partners-supported Altimar will combine with Fathom to form a $1.5 billion firm that’s set to be backed with $80 million in funding, and become listed on the NYSE under ‘FDMG.’ Using its newfound capital, the company seeks to scale its production capabilities as well as target inorganic growth, and it has already lined up a “robust pipeline of potential acquisitions.”

“Product life cycles are so much shorter than they were even five years ago, and companies need an on-demand advanced manufacturing partner who can move quickly and serve all their requirements without sacrificing quality,” said Ryan Martin, CEO of Fathom. “We believe that we are well-positioned to become that manufacturing partner of choice for more clients.” 

“With Industry 4.0 taking off, we believe Fathom is on the cusp of a significant growth opportunity, and we’re thrilled to be combining with Altimar as we make our public market debut.”

A selection of 3D printers in FATHOM's expansive technology offering. Photo via FATHOM.
Fathom’s expansive offering includes the Polyjet, FDM, SLS, MJF, SLA, DMLS and AM post-processing technologies. Photo via Fathom.

An on-demand growth opportunity?

Headquartered in Hartland, Wisconsin, Fathom markets a suite of on-demand manufacturing services via its fleet of more than 90 3D printers. Through its core offering, including the 3D printing, CNC machining, injection molding and urethane casting of parts, the company often targets aerospace and defense clientele, but it has also sought to expand on its software portfolio to address new markets. 

Back in February 2018, Fathom launched its open-source Crystallon plug-in for the Rhino and Grasshopper3D modeling programs. Designed to serve as an alternative to commercial design software, Crystallon provides users with the tools needed to create optimized lattice structures, while allowing them to continually be improved upon and customized to meet the design requirements of individual adopters. 

Shortly afterwards, the company partnered with GoEngineer to promote the cross-industry adoption of 3D printing, with the latter helping accelerate Fathom’s product development, and later in August 2019, the firm also gained a patent for the technology behind its online quoting platform, as well as its seventh consecutive ranking on the Inc 5000 list of fastest-growing private U.S. companies. 

Due to its consistent growth trajectory, Fathom now considers itself “well-positioned to capitalize” on what it sees as a $25 billion low-to-mid-volume manufacturing market. As a result, using its stock as ‘acquisition currency’ via its merger with Altimar, the firm says that it now aims to purchase those related companies which are “looking to become part of a larger platform.”

“Ryan and his experienced team have built a business that has a promising growth trajectory,” explained Tom Wasserman, Chairman and CEO of Altimar. “As more companies realize the benefits of on-demand manufacturing, we believe that Fathom’s multi-year head start has resulted in a high barrier to entry that few peers can penetrate.” 

The FATHOM team celebrating 7th consecutive year on the Inc 5000 list. Photo via FATHOM.
The Fathom team celebrating the firm’s seventh consecutive year on the Inc 5000 list. Photo via Fathom.

Fathoming a $1.5 billion merger 

Fathom’s Business Combination agreement with Altimar effectively sees it merge with a consortium of SPACs, co-sponsored by various affiliates of HPS Investment Partners, a VC firm which has an asset portfolio of around $72 billion as well as a background in similar deals, and it also backed Trine Acquisition’s $2.5 billion Desktop Metal deal last year.  

Funded by Altimar’s cash in trust, the transaction is expected to be followed by an $80 million Private Investment in Public Equity or ‘PIPE’ at $10.00 per share. The investment, which reportedly has the backing of several “top-tier institutional investors,” is set to help finance the formation of a new $1.5 billion firm, that will continue to count CORE Industrial Partners as its largest shareholder. 

Following the transaction, the firms have agreed that Fathom’s CEO Ryan Martin, CFO Mark Frost, CCO Rich Stump and Chairman TJ Chung will all continue in their current roles. Now ratified by the boards of both companies, it’s anticipated that the merger will be finalized by Q4 2021, subject to closing conditions, including a registration statement from the SEC and the approval of Altimar’s shareholders. 

“When we first invested in Fathom, we knew that the company had a clear path for growth as one of the earliest adopters of AM in a fragmented manufacturing space that was only just realizing the benefits of Industry 4.0,” said John May, Managing Partner of CORE Industrial Partners. “We’re delighted to remain the largest shareholder in Fathom as it continues its growth journey.” 

“As we predicted, the market has evolved in Fathom’s favor, and the company maintains a strong runway for expansion.”

The SPAC boom continues 

Over the last year, some of 3D printing’s largest companies have opted to go public, with many choosing to merge with SPACs to form combined firms worth over $13 billion. In December 2020, Desktop Metal became the first such company, joining with Trine Acquisition to launch its IPO on the NYSE, while raising $580 million.

Earlier this month, Markforged followed suit, going public on the NYSE via a $2.1 billion merger with SPAC one. While the move has seen the company raise $361 million in gross proceeds, it has not yet shown any interest in investing within inorganic growth, and it has instead emphasized the potential of the “exciting products in its pipeline.”

Elsewhere, 3D printing service provider Xometry has gone public on Nasdaq via a traditional IPO and Shapeways is set to merge with Galileo Acquisition, with the aim of launching its IPO later this year as a new $410 million firm. As a result, Fathom’s combination agreement sees it become the third bureau of its kind to join additive manufacturing’s seemingly ongoing SPAC IPO trend. 

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Featured image shows some of Fathom’s vast 3D printing portfolio. Photo via Fathom.