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3D printing promised to revolutionize the production of everything from toys to biomedical implants to “additive manufacturing”. Now the hype has died down and four major manufacturers are in the midst of merger machinations that could cut them down to two or three.
Stratasys, 3D Systems, Nano Dimension and Desktop Metal have sparked investor interest in 3D printing, in which software-controlled machines build products layer by layer. Among those who bought their shares was an exchange-traded fund managed by Ark Investment Management, high-level technology stock picker Cathie Wood – symbol PRNT.
But their valuations have fallen since the start of 2021 as they face stubborn barriers to using technology for mass-produced goods. Losing money and struggling to raise funds, they pursue reconciliations. Dealmaking is notable for its corporate intrigue, however, with disputes involving companies and their shareholders now taking place in court.
“The 3D printing industry, which is currently stagnant due to talent turnover and governance issues, needs the shock that only mergers and acquisitions can provide,” said Chris Prucha, a technology entrepreneur who had sold his company to Stratasys.
Stratasys agreed in May to pay $700 million in stock to buy Desktop Metal, a company it had venture capital invested in a decade ago. Desktop Metal’s stock slumped to under $2 from a high of $31, hit after it went public in a deal with an investor-backed blank check company. They included HPS Investment Partners and Chamath Palihapitiya, a serial promoter of special purpose acquisition companies.
However, Stratasys itself is a takeover target. 3D Systems has been seeking to acquire the Minnesota and Israel-based company since 2021. Last week, 3D criticized Stratasys’ views on Desktop Metal as “unfounded and unreasonable” while making its sixth separate cash and stock offer. for Stratasys.
Stratasys has yet to commit to 3D on its latest offerings, calling them “opportunistic”.
Nano Dimension also wants to control Stratasys: after announcing that it had taken a 12% stake in the group a year ago, it then launched an unsolicited takeover bid to buy all of Stratasys for cash in March, later amended to say she wants to achieve just a majority stake.
Nano posted less than $50 million in revenue last year but has a cash balance of nearly $1 billion – a sum larger than its market capitalization – with which to bolster its bid for Stratasys. The company raised around $1.5 billion in 2020 and 2021 with the help of celebrity tech investors such as Wood. Its PRNT ETF grew from less than $40 million in assets under management in June 2020 to more than $725 million in February 2021, making it a heavy buyer of most 3D printing stocks before finally lose half of its value.
Activist investor Donerail Group, which took a 2% stake in Stratasys, called the company’s resistance to bids from 3D Systems and Nano “fiduciary negligence” and “unconscionable”.
Stratasys initiated a poison pill defense to thwart Nano’s takeover campaign, prompting Nano to file a lawsuit in the Israeli court system, which has jurisdiction over Stratasys’ corporate affairs.
Yoav Stern, the Israel-based chief executive of Nano, has taken to taking aim at both friends and adversaries in weekly YouTube videos.
However, Stern was also forced to play defense. A group of activist investors, Murchinson Ltd, Anson Advisors and Boothbay Fund Management, sought to replace its board and demanded that Nano return its $1 billion treasury to shareholders rather than sue Stratasys.
At a special meeting of shareholders in March called by Murchinson, the fund said other shareholders voted overwhelmingly to remove Stern and three other directors from Nano’s board. The vote result is also being challenged in an Israeli court, giving Stratasys ammunition to fend off Nano’s takeover bid.
Nano also sued his nemesis in federal court in New York, alleging that they filed false and misleading regulatory information and sought to manipulate Nano’s stock price.
3D, Nano, Murchinson, Anson and Boothbay declined to comment for this article, while Stratasys and Desktop did not respond to requests for comment.
Murchinson, in a public letter this year, accused Nano of “spending time and money acting like an activist hedge fund and not focusing on 3D printing.”
A few days later, Stern responded to Murchinson on YouTube, saying Murchinson was not a long-term shareholder. “I spend time running the business and making these videos, which is three hours a week, so no, this business is not distracted,” he said.
He said he would leave immediately if the shareholders fire him. “But until then, you don’t get the money,” he added, indicating that Nano would continue to sue Stratasys and not return any money.
He went on to warn critics, “You haven’t gotten me to the point where I’m angry. . . you have brought me to a point where I have nothing to lose. And it’s a dangerous place to put a person.
In their recent deal announcement, Stratasys and Desktop Metal predicted that the 3D printing market would grow to $100 billion within ten years. However, the four listed companies generate less than $2 billion in revenue per year.
“Everyone agrees on one thing: this consolidation needs to happen,” said an investment banker involved in the deal drama. “Three of the Pieces [Stratasys, 3D Systems, Nano] should be together, and the question now is, ‘What is the order of operations?’ »