Russia’s large-scale military attack on Ukraine, which began only five days ago, is impacting financial markets and businesses globally. Just a few hours ago, we learned that German firm EOS decided on Friday to stop any business with Russian customers, while many executives of AM firms have expressed their support for Ukrainians, pleading for peace. Today we find out that Zortrax (FRA: 9GK), the largest Polish manufacturer of fused filament fabrication (FFF) and UV stereolithography (SLA) 3D printers, decided to withdraw from further negotiations with Russian 3D printing technology developer Rusatom–Additive Technologies (RusAT).
In July 2021, the Moscow headquartered enterprise expressed interest in Zortrax and announced it had signed a nonbinding agreement to invest up to $65 million in exchange for less than 50 percent of Zortrax shares in what would have been the highest investment in the Polish 3D printing industry so far. According to the signed term sheet, RusAT would have acquired over 13 million of the company’s shares issued so far and another 88 million shares of the new issue. However, now that the Russia-Ukraine conflict is in full force, Zortrax decided against signing an annex prolonging the negotiations with RusAT, declining to continue talks on the investment deal.
Commenting on the situation, Zortrax CEO Mariusz Babula said the “Russian aggression against Ukraine left us all shocked and outraged. It also rendered it absolutely clear that Zortrax’s mission cannot and will not be financed with money that made this aggression possible. For this reason, we are withdrawing from further negotiations with Rusatom – Additive Technologies which is a Russian state-owned company.”
Following the announcement, Zortrax highlighted that the withdrawal from the investment deal “will not negatively affect its performance on the global 3D printing market, its ability to develop new products or its overall financial standing.” Furthermore, the latest financial results published by Zortrax reveal a significant upwards trend beginning from the fourth quarter of 2021, with a 28% increase in sales compared to the same period last year, which gives strong reasons to expect further growth in the future, even without RusAT’s multi-million dollar deal.
On February 14, 2022, Zortrax also revealed fourth-quarter sales of 2021 of zł11.9 million ($2.8 million) and were nearly 70% higher than in the third quarter of 2021. At the time, Babula anticipated that the company would register an increasing demand for its products in 2021. Furthermore, according to the published report, sales revenues for the full year 2021 was zł 20.1 million ($4.7 million), a 20-fold increase compared to zł998 thousand ($234 thousand) in 2020.
Unlike commercial 3D printing firm Zortrax, RusAT is part of a Russian state corporation called ROSATOM, specializing in nuclear energy and high-tech products. In just four years, RusAT developed two additive printing technologies: selective laser melting and straight metal overlay, where a metal powder is sent to the overlay zone together with a laser beam. The special-purpose subsidiary has focused on four key areas since its foundation in February 2018, from manufacturing 3D printers and their components to producing materials and metal powders.
On December 26, 2020, it became known that RusAT opened the first Center of Additive Technologies (CAT). However, the announcement was overshadowed by complications since the ATC is located at the site of the Moscow Polymetal Plant, a controversial location that used to be home to a former Soviet-era facility that extracted thorium and uranium from ore for nuclear reactors and dumped radioactive waste until the 1960s. Nonetheless, ROSATOM moved ahead with its plans to launch its first ATC facility as part of RusAT’s business target.
With the ultimate goal of introducing affordable additive manufacturing technologies to industrial enterprises, RusAT claimed it made printers 20% cheaper than any foreign model. But then, in 2021, the company showed broad interest in acquiring Zortrax, or at least part of the company, in what felt like an attempt for the Russian business to enter the European market. Initially, both parties intended to close the transaction by the end of 2021. In fact, since the signing of the agreement, RusAT had a three-month exclusivity period, during which time Zortrax had to abstain from any agreements or transactions to sell its shares. Now that the deal has failed, there have been no press releases or comments from the Russian enterprise as of yet.
With Russia’s advance on Kyiv and fears of a prolonged war lingering, we might see a cascade of deals, collaborations, partnerships, and sales with Russian 3D printing companies recede. The list of foreign companies pulling out of Russia alone keeps piling up, mainly as severe sanctions are being imposed on Russia, aimed to hit its financial, energy, and transport sectors, and include export controls and trade financing bans.
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