Dream 3D Printing Mergers & Acquisitions: Who Will Buy voxeljet?

In a significant development, voxeljet AG (Nasdaq: VJET), likely the only manufacturer of large-scale sand 3D printers, announced a formal review process to explore various strategic alternatives for the company. The review will be overseen by its Management Board and the Supervisory Board and could potentially lead to substantial changes, including mergers, investments, or joint ventures.

As its financial advisor, the company has enlisted the expertise of BNP Paribas Securities Corp, the brokerage subsidiary of one of the largest banks in the world, BNP Paribas of France. Meanwhile, Hogan Lovells International LLP as legal counsel for this endeavor. The range of possibilities is broad, including investments, mergers and acquisitions, joint ventures, and strategic partnerships among others. However, the company has stated that there is no definitive timetable for this review, nor is there any guarantee that the process will result in any form of transaction or strategic change.

Rocky Road

The announcement comes at a time when the 3D printing industry is in undergoing crucial changes. The global economic situation has led smaller firms to suffer financially, opening up the opportunity for acquisitions by larger companies. voxeljet happens to represent the former, but it has suffered financial difficulties before the COVID-19 pandemic.

In August 2019, voxeljet received a notice from the New York Stock Exchange (NYSE) due to the fact that the company’s average global market capitalization over a 30-day trading period fell below $50 million. This was followed in May 2020 with another non-compliance notice when its average closing share price fell below $1.00 for 30 consecutive days. Finally, in August 2020, the company announced its decision to voluntarily transfer from the NYSE to the NASDAQ.

The company’s Q2 2023 financial report showed a modest revenue increase of 2.2%, reaching €6.8 million; however, its net loss doubled to €3.6 million. The systems segment, focused on 3D printer development and sales, demonstrated strong performance with an 11.5% increase in revenue, attributed to the sale of three new 3D printers. On the other hand, the services segment saw an 8.7% decline, particularly in its German and Chinese service centers.

Overall, voxeljet appears to be in a precarious financial situation based on its 2022 numbers. The firm’s persistent negative operating and free cash flows pose challenges for the company’s sustainability. However, the positive investing cash flow and a relatively stable end cash position may provide some cushion. A significant portion of the financing cash flow is going into debt repayment, which could be a strategy to reduce long-term liabilities. However, its declining end-of-year cash position from 2021 means it needs fresh capital to maintain its ongoing activities.

Tech Developments and Partnerships

Despite the struggle its stock has faced, the company continued to innovate and earn high-profile customers. In 2015, it announced a partnership with inkjet printer head manufacturer Xaar to develop high-speed sintering (HSS) technology. Since then, voxeljet has demonstrated a number of high-volume applications with the process, uniquely benefited by the German company’s expertise in massive binder jetting machines.

On-demand printing of TPU parts via HSS. Image courtesy of voxeljet.

Perhaps more importantly, voxeljet also saw its technology used by a number of prominent auto companies, a trend that has increased in the past year alone. Through its U.S. customer, Tooling & Equipment International (TEI), voxeljet’s VX4000, the world’s largest sand 3D printer, is being used to produce sand casting parts by General Motors and BMW for automobile manufacturing. It was also revealed that Tesla was using sand 3D printing to cast large complex car parts, presumably relying on voxljet’s technology given the size of the sand molds. In the case of BMW, this is being performed in an automated manner.

3D printed sand cores made using voxeljet technology.

All of this is to say that voxeljet is a valuable company, despite its financial hiccups. With that in mind, it seems likely that firm will continue onward in some form or another. The question is in what form.

Buyers, Mergers, and Joint Ventures

Given the sheer size of the equipment produced by the firm, it’s difficult for a smaller business to manufacture at the scale needed by large industrial clients like BMW, GM, and Tesla. For that reason, it’s been argued that consolidation is necessary for the technology to scale. With that in mind, there are plenty of potential partners or buyers for a company like voxeljet.

We might first consider the variety of businesses involved in binder jetting. Until this summer, the most natural fit would have seemed to be Desktop Metal (NYSE: DM), as it acquired ExOne, formerly a part of voxeljet’s predecessor company, Generis GmbH. However, Desktop is currently in the midst of a possible merger with polymer 3D printing stalwart Stratasys (Nasdaq: SSYS).

It is unlikely that the combined business would immediately be able to purchase voxeljet, but it would be a complementary acquisition. After all, Xaar’s 3D printing division was ultimately bought by Stratasys and drives voxeljet’s HSS, a variation of Stratasys’s own selective absorption fusion process. In 2020, voxeljet also formed a partnership with materials company Covestro to add thermoplastic polyurethane (TPU) to its HSS platform. Covestro was then bought by Stratasys in 2022.

With an overall build space volume of 4x2x1 meters, the VX4000 is the largest industrial printer in the world. Image courtesy of voxeljet.

There’s also HP (NYSE: HPQ) and GE Additive (NYSE: GE), both of whom manufacture binder jetting machines. A voxeljet purchase would make sense for each. HSS would allow HP to go big with its Multi Jet Fusion (MJF) polymer 3D printing technology. This was a plan it alluded to when MJF was unveiled in the last decade, as HP produces large-scale 2D printers. Sand 3D printing complements the business’s metal binder jetting platform.

For GE, who makes the industry’s biggest metal binder jet system, it could enter into sand 3D printing, which would serve any number of clients. In particular, GE Renewable is working with voxeljet to develop an even bigger sand 3D printer for use in wind turbine manufacturing. It also just received substantial funding from the U.S. Department of Energy.

Other possibilities include the other firms involved in the merger drama related to Stratasys: 3D Systems (NYSE: DDD) and Nano Dimension (Nasdaq: NNDM). Both businesses have acquired unique companies that don’t always make immediate sense upon a superficial examination.

Then, there’s the possibility that a purchase might occur from outside of the industry, as was recently seen with Align Technologies and Cubicure. Any one of its large customers could acquire voxeljet to vertically integrate the technology and prevent competitors from leveraging the advantages of massive sand 3D printing. The fact that GM, BMW, and Tesla all had stories featuring the use of the technology published this year could suggest that increased publicity was a negotiating tactic to increase the value of the firm in negotiations.

A rendering of BMW’s sand core production line.

Buyers from Asia

Because it’s nearly impossible to really predict what will happen without being inside of the boardrooms where discussions are taking place, it’s always necessary to consider a surprising element. Chinese and Indian companies have been acquiring important manufacturers from the West.

In our sector, ChemChina purchased German injection molding giant KraussMaffei in 2016. Auto firm Daimler and robotics company Kuka, as well as aerospace business Cotesa, are all Chinese-owned German enterprises. Elmos Semiconductor in Germany attempted to sell a chip factory to a Chinese firm as just one among a number of failed acquisitions due to international politics.

As an emerging world power, India has been steadily increasing in status economically. Indicative of this was the purchase of the Jaguar Land Rover by India’s Tata Motors in 2008. More recently, a German adhesives business was sold to a subsidiary of the Murugappa group. In 2021, the Mahindra Group purchased a German tech consulting business as part of a string of buyouts, marking just one of several German businesses bought by Indian firms that year. In 2022, Reliance Industries, the country’s most valuable business and owned by one of the world’s richest men, announced that it would acquire German firm Metro AG.

As voxeljet reported that its Asian services flagged in Q2 2023, there is a possibility that an Asian buyer could have been waiting to bring the company in-house. PeeKay Steel Castings (P) Limited, for instance, is one voxeljet customer that houses a VX4000 at its technical innovation center.

At this point in the industry, none of the above would surprise me. With limited knowledge of the Asian market, it would be more difficult to take a guess as to who might be an ideal purchaser or partner. Depending on what region you locate Stratasys, I do believe there is a possibility there. In Europe and North America, I would lean toward GE or BMW, but am at an overall loss as to a more precise prediction.

Incidentally, BNP will be participating at the upcoming Additive Manufacturing Strategies 2024 event in New York, February 6-8, 2024. At the event, Christian Hartenberger, who leads the company’s Industrial Technology and Aerospace/Defense Investment Banking division, will be on the “Printing Money: M&A and Public Markets” panel, so he may be able to tell us about whatever developments have occurred with voxeljet by then.