Stratasys, 3D Systems, Desktop Metal, and Nano Dimension merger activity – what does this mean for the 3D printing industry?

Hot take time. 3D Systems has thrown its hat into the ring, and made a bid to acquire Stratasys, Stratasys plans to acquire Desktop Metal, and Nano Dimension is ready to buy or be bought.

3D printing conferences frequently feature talk of working together, is this what was meant? The assimilation of all additive enterprises into a singular, all-powerful, all-technology monolith. Probably not. 

Let’s examine how takeover activity might play out in the coming months. 

3D printing industry takeover

What better place for a 3D printing news website to begin a hot take than over a decade ago?

The bids for Stratasys have surpassed the $1 billion mark, and bring to mind the $1.4 billion takeover of Concept Laser and Arcam by GE in 2016. Readers will recall that the road to that union was rocky one. Leading up to the purchase, GE first acquired Morris Technologies in 2012. Morris Technologies, a precision manufacturing company, and supplier to GE Aviation, was previously contracted to 3D print metal parts for the LEAP jet engine

Liking what they saw, GE would have gone to the logical next step – acquiring the company that made the AM systems used by Morris with further vertical integration to secure the supply chain. Yet, the 3D printing industry’s largest enterprise was not for sale, and EOS remains a private company, sheltered from the financial speculation and scrutiny to which publicly listed enterprises are subject. GE then turned its attention to SLM Solutions but found shares already snatched up by billionaire Paul Singer’s activist fund Elliott Management. 

Responding to that news 3D Printing Industry wrote that an acquisition by GE of Concept Laser would be on the cards. Later in October 2016, that is just what happened. 

How does this relate to now? It took a while, but SLM Solutions was eventually purchased. Announced in 2022, and wrapped up in Q1 2023, Nikon acquired SLM Solutions for €622 million

2D printing companies are already diversifying due to the terminal decline in paper-orientated businesses. Whether through investment in medical, biotech, wearables, and even EV.

The likes of HP, Canon, Epson, Ricoh, Brother, and Xerox are active in replacing revenue streams. Xerox’s 2019 acquisition of Vader Systems “Magnet-o-Jet” didn’t pan out. The technology was at an early stage, and this may have dampened enthusiasm. While HP has been very successful in producing a polymer 3D printing system that is in demand. It hopes to replicate the success of the Multi Jet Fusion range with the HP Metal Jet

In-house development takes time, but the R&D investment can pay off in the long term. That HP’s old rivals in the 2D printing space have the appetite to jump the queue on that R&D phase and buy an additive market leader would not be surprising. 

Explosion in all directions

The current powder keg has been building up for a while, with plenty of talk about consolidation. Is the Stratasys takeover battle the spark that will ignite a boom in M&A for the second half of 2023? Seeing the double-digit CAGR, and increasing volume, how long before industrial multi-national conglomerates start buying up the likes of 3D Systems, Stratasys, or Desktop Metal? 

Likewise, software companies often dwarf hardware enterprises by market cap. With the total addressable market growing, is a move by one of the engineering and manufacturing software firms likely? A horizontal integration play.

Is it too wild to consider vertical integration by current customers of the major 3D printing companies? Align Technology, a significant user of 3D printing in the dental market, is an important customer for 3D Systems. Incidentally, in November 2022 a strategic partnership was announced between Desktop Metal and Align. By market capitalization, Align Technology is valued at $22.7 billion today, versus the total size of the 3D printing industry at $18 billion.

M&A activity and speculation

As the history of mergers in the 3D printing industry shows, stakebuilding by activist investors, Elliot then, Murchinson now, leads to a different type of disruption in the industry. Accounting machinations enrich advisors, consultants, and executives with structured share option plans, yet how does this advance technology and serve customers? But hasn’t it always been this way? 

The recent crop of SPACs may also be ripe for picking.

So to conclude, it’s time to talk about the circle of life. What happens when the promised synergy does not materialize? Enterprises with under-utilized talented people, or technology that is not fully assimilated can lead to frustration. An outcome of such frustration is those people leave the taken-over business. Leaving to start their own companies, providing a fresh wave of innovation. And the cycle begins once more.

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Featured image shows SLA 750 3D printers by 3D Systems. Photo via 3D Systems.