Additive Manufacturing Strategies

Essentium to Go Public via SPAC, Announces Metal 3D Printing Development

ST Medical Devices

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Essentium is the latest firm in the 3D printing industry to announce a merger with a special purpose acquisition company (SPAC) to achieve a public listing. The Austin-based startup has entered into a definitive business combination agreement with Atlantic Coastal Acquisition Corporation (NASDAQ: ACAH), with the deal expected to be completed toward the end of Q1 2022. Once the two merge, the resulting entity will still be called Essentium and will trade on the Nasdaq under the ticker symbol “ADTV”.

“Essentium is transforming the future landscape of supply chains by delivering truly distributed, sustainable manufacturing and operating solutions within all contexts including the ability to operate successfully in contested logistics environments,” Blake Teipel, Ph.D., Chief Executive Officer of Essentium, said. “Fundamental deficits in our existing global supply chain models are being exacerbated by escalating obstacles such as trade imbalances and the global pandemic – all leading to protracted distribution bottlenecks. Today’s announcement represents a major milestone in our efforts to provide long-term, sustainable solutions for a new manufacturing paradigm that can meet these global challenges head-on. Essentium’s solution deploys regional, distributed production capabilities to enable supply chain transparency, and flexible inventory management at a highly competitive TCO, all while reducing waste and supporting a limited carbon footprint through on-site printing.”

Essentium was founded in 2013, beginning with a focus on materials and improving z-axis adhesion in material extrusion technology. To overcome Z-axis weakness, Essentium’s FlashFuse process relies on electromagnetic elements to Joule heat the interfaces between layers, activating nanoparticles within the polymer filament and joining the layers together with a strong bond.

Essentium's HSE 280i HT 3D printer.

Essentium’s HSE 280i HT 3D printer. Image courtesy of Essentium.

Wishing to get onto the market sooner than was possible with this technique, the company released its high-temperature, high-speed extrusion (HSE) machines, the HSE 180 HT and HSE 280i HT, making it a fully-fledged machine manufacturer, in addition to providing software, services, and materials. Its HSE systems are described by Essentium as being five to 15 times faster than other extrusion machines, with real-time data capture. With the purchase of Collider, it has brought in-house a unique digital light processing (DLP) method for the production of injection molding-style parts, as well.

This is the just the beginning of the firm’s materials and process capabilities. In the news of its merger with Atlantic Coastal, Essentium noted that it is creating a “suite of metal-additive systems designed to offer unique metallurgies and advanced microstructures for applications with demanding structural integrity.” The firm suggests that this will allow it to gradually tackle a total address market of $318 billion.

“We launched Atlantic Coastal with an ESG-centric focus and a mandate to partner with a company that will transform the nature of international commerce, and we believe that Essentium, with its potential to change the global supply chain, is exactly that partner,” said Shahraab Ahmad, Chairman and Chief Executive Officer of Atlantic Coastal. “Blake and his experienced team have developed a deep technology moat, a product ecosystem validated by the DoD, and a razor/razor-blade model that delivers significant recurring revenue, supporting gross margin expansion and highly attractive unit economics.”

“We believe that following this transaction, Essentium will be extremely well-positioned for rapid growth as it further expands its ecosystem offerings, capitalizes on its line-of-sight sales pipeline, and executes on its M&A strategy as it continues to advance additive manufacturing as a public company,” said Tony Eisenberg, Chief Strategy Officer of Atlantic Coastal Acquisition Corp.

Essentium co-founder and CEO Blake Teipel. Image courtesy of Essentium.

It would be difficult to believe that Essentium could achieve such a market, if it weren’t the faith that important actors have placed in the firm. It previously received a $22 million investment from BASF, the world’s largest chemical company, and Materialise, the leading additive manufacturing (AM) service bureau and software provider. It has also worked closely with the U.S. Department of Defense, Lockheed Martin and Ford. It also has over 150 patents across polymer and metal 3D printers, processes and materials.

The complete details of the transaction can be found here. For our purposes, it’s worth quoting the information provided in Essenitum’s press release, which includes the fact that BASF is participating in the SPAC process:

“The proposed business combination values the combined company at a $974 million pro forma enterprise value, at a price of $10.00 per share and assuming no redemptions by Atlantic Coastal shareholders, offering an attractive valuation of 4.6x Essentium’s projected 2023E Revenue of $212 million. The proposed transaction is expected to deliver up to $346 million of net proceeds to the Company, assuming no redemptions and net of transaction expenses, including a fully committed common stock PIPE of over $40 million at $10.00 per share led by institutional and strategic investors including BASF, Atalaya and Apeiron. Atlantic Coastal’s management team is also contributing $20 million to the PIPE.

Existing Essentium shareholders will roll over 100% of their equity into the combined company. Following the closing of the transaction, these shareholders are expected to hold approximately 64% of the issued and outstanding shares of common stock.”

Upon merging, Essentium will maintain its current management and a Board of Directors that includes Burt Jordan, President of Atlantic Coastal Acquisition Corp. and a former executive at Ford. Slides discussing the proposed merger are available here.

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