Pioneering 3D Printing Provider Fathom to Go Public via SPAC Deal at $1.5B Valuation

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3D printing company Fathom announced it will merge with blank-check firm Altimar Acquisition Corp. II in a multi-million dollar deal that will help expand its on-demand digital manufacturing platform through a series of planned acquisitions. Under the terms of the transaction, which is expected to close in the fourth quarter of 2021, the combined company would reach an enterprise value of $1.5 billion and will be listed on the New York Stock Exchange (NYSE) under the ticker symbol “FDMG.”

The agreement will provide more than $420 million of net proceeds, including an $80 million fully committed common stock private investment in public equity (PIPE) anchored by top-tier institutional investors. Fathom will increase its leadership in additive and traditional advanced manufacturing capabilities through the new business deal and accelerate its continued investments in organic and inorganic growth opportunities to expand key capabilities for its growing customer base. In addition, the company currently has a robust pipeline of potential acquisitions, and when it goes public, it will be able to use its stock as acquisition currency. caught up with Fathom CEO Ryan Martin and Co-Founder and Chief Commercial Officer Rich Stump to discuss the deal and their vision for the company.

Fathom Manufacturing CEO Ryan Martin at the company’s headquarters in Hartland. Image courtesy of Fathom Manufacturing.

An early pioneer in the on-demand manufacturing arena, Fathom played a big part in the existence of this space. With more than three decades of manufacturing experience, the firm leverages seven additive manufacturing technologies and adds what Martin calls the “innovation factor,” using additive alongside traditional techniques to solve customer problems and push the industry forward. With most of its customer base made up of Fortune 500 companies and cutting-edge firms with some of the largest R&D budgets, Fathom is trying to drive product innovation fast.

“We looked at multiple different routes to take the company public, but with Altimar, we found the ideal partner. From the start, we shared a vision of how we could grow the business and expand into the next level,” said Martin. “We have not only top-line growth but also a strong bottom line of free cash flow, so we think this is a great investment opportunity. There is a lot of interest from investors who feel this technology will change the way manufacturing is done, and they see enormous growth with our company. So there is a tremendous runway ahead of Fathom as a scaled player.”

Industry 4.0, the next wave of the industrial revolution driven by the digitization of manufacturing, including the commercialization of additive manufacturing complemented by advanced traditional manufacturing technologies and advancements in software tools and AI, has created a massive economic opportunity specifically for production parts in the $25 billion low- to mid-volume manufacturing space that makes up Fathom’s addressable market.

Martin believes there are thousands of smaller regionalized, very specialized, strong suppliers within this specific arena. However, even though many of them are very good at what they do, they are typically specialized in a single manufacturing process.

“We see with industry 4.0 trends that large corporate customers try to find suppliers that offer a wider breadth of capabilities allowing them to ultimately accelerate product development and low volume manufacturing needs. Part of our goal has been to identify the leaders in this fragmented market, acquire them and then bring those capabilities into our platform. We already have a track record of 13 acquisitions in the last three years. Still, through this new SPAC merger, we will not only continue to grow organically but have currency through stock and investment to continue our acquisitions.”

Fathom Manufacturing facility at Hartland, Wisconsin headquarters. Image courtesy of Fathom Manufacturing.

In 2019, Fathom was acquired by Chicago-based private equity fund CORE Industrial Partners, and together with another previously CORE-acquired company, Midwest Composite Technologies, they formed one of the largest privately-held digital manufacturing service providers in North America. Fathom’s on-demand digital manufacturing platforms, combining a broad array of in-house additive and traditional manufacturing technologies, now provides customers with hybridized solutions that uniquely blend additive, subtractive, and formative technologies that push the bounds of product design and development.

To serve the comprehensive product development and low- to mid-volume production needs of some of the largest companies in the world, the business has over 90 large-platform additive manufacturing machines and nearly 450,000 square feet of manufacturing capacity across twelve facilities nationwide. Furthermore, Fathom uses its proprietary software platform to seamlessly blend in-house capabilities across plastic and metal additive manufacturing technologies.

Although Fathom’s platform is chosen by hundreds of companies in a wide range of industries, Stump and Martin have observed specific areas drive demand in the last 12 months; basically, the medical space, electrical vehicle startups, traditional automotive OEMs, and the space industry.

“From an applications standpoint on the additive side, a big market that we focus on is what we call ‘bridge to production.’ Since many companies are trying to get more differentiated, complex products to market faster than ever before, they need comprehensive capabilities to push the limits of manufacturing constraints. This gap is a tremendous opportunity, and obviously, additive is the bridge to production here,” explained Stump.

Whereas the company offers both plastic and metal 3D printing, taking advantage of all their available technologies, Martin and Stump indicated that they are witnessing massive growth on the metal side. Also, SLS explicitly attracts a significant share of their business.

“The market is changing. We reached the next industrial revolution with industry 4.0, and consumers are more demanding than ever. Fortune 500 companies have to produce higher functioning products that are differentiated to compete in the marketplace, so designs are getting more complex, plus supply chain simplification and consolidation is a big issue, as is the use of automation, robotics, and 3D printing. Overall, we see a tremendous opportunity in the convergence of additive with traditional manufacturing to push the constraints of manufacturing for our customers’ design specifications,” Stump went on.

Fathom Manufacturing facility at Hartland, Wisconsin headquarters. Image courtesy of Fathom Manufacturing.

Fathom approaches the new deal from a financially strong position, generating $149 million in revenue in 2020 and witnessing continued growth in 2021 from a top-line perspective. Upon closing the transaction, Fathom’s senior management will continue to serve in their current roles, including Martin as CEO, Stump as Chief Commercial Officer, and Mark Frost as Chief Financial Officer. Additionally, the company’s board will include former executives at leading manufacturing companies such as General Electric, 3M, Ingersoll Rand, and Chrysler. With Stifel and J.P. Morgan Securities as joint financial advisors, the business is on track to become publicly listed on the NYSE.

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