Nano Dimension to Buy Desktop Metal

With rumors swirling around consolidation, Nano Dimension (Nasdaq: NNDM) today has announced that it will acquire Desktop Metal (NYSE: DM). The new company will have revenues of $246 million. The offer is all cash all-cash at $5.50 per share, 27.3% higher than the closing price before the announcement and a 20.5% premium to the 30-day VWAP as of July 2, 2024. This is in line with what the stock has been trading at. In turn, the total price is estimated to be around $183 million, but could drop down to $4.07 per share or $135 million. The stock is trading 95% lower than highs so this is quite the discount from IPO.

Nano Dimension CEO Yoav Stern said of the deal, “Our combination with Desktop Metal is another step in Nano Dimension’s evolution to become the leader in digital manufacturing, with capabilities in mass manufacturing for critical industrial applications. We’re excited to join forces with an excellent group of technology leaders, all of whom share our vision for transforming manufacturing to Digital Industry 4.0. I look forward to working with Ric Fulop and his team to drive value for all our stakeholders, including creating opportunities for our employees as part of a larger, more diversified global innovative company, driving customer support and generating long-term growing value for shareholders as we focus on profitable growth.”

While Ric Fulop, CEO of Desktop Metal, stated, “We’re excited to bring together our pioneering, complementary product portfolios that will further enhance our ability to serve our customers in high-growth industries with a more complete offering of digital manufacturing technologies for metal, electronics, casting, polymer, micro-polymer and ceramics applications. We look forward to working with Nano Dimension to join two great companies and their devoted teams that can serve our stakeholders to the maximum extent possible.”

Nano Dimension believes the two firms will give it a very broad product portfolio, from 3D printing electronics to binder jet and sand casting. The company also states that this will help drive “3D printing innovative solutions that drive the transition from prototyping to mainstream tooling and end-use part production.” The company hopes its heft will drive application discovery and industrialization. They also hope to cross-sell products to existing clients. The combined firm aims to increase margins and leverage these across relationships with high-end customers.

The company says that Desktop Metal has sold over 8,000 systems and has recurring revenue streams of 28%. They believe a cash-strong company will drive synergies and future growth and hope to save $30 million over the next years. The company also aims to consolidate offices and manufacturing locations. Should the transaction be delayed into next year, Nano Dimension will loan Desktop Metal $20 million. The transaction is set to be brought before the board and shareholders for approval. The duo expects the deal to be closed by the end of this year. In total, the completed transaction should leave Nano Dimension with $665 million in cash. Greenhill & Co advised Nano Dimension, while Stifel advised Desktop Metal.

Is This a Good Thing?

The news comes after a nearly year-long drama regarding Desktop Metal’s proposed merger with Stratasys, which led to bids from 3D Systems and Nano to purchase Stratasys. This is a very good move for Ric Fulop and Desktop Metal. It seemed almost certain the firm would run out of cash. With no other obvious suitor out there, the all-cash transaction is far from IPO highs—95% lower, in fact. It’s also far lower than the $860 million Desktop spent on ExOne and EnvisionTEC in 2021. Nevertheless, the deal should still see some people getting more money out. I didn’t see another move unless they could have pulled off something more difficult, such as selling to a CNC or other machine tool company, but I don’t think this was in the cards.

For Nano Dimension, I’m not sure this was the right move. Yes, they get revenues, but they inherit a company that has not been integrated. A new strategy espousing patience and perhaps an acquisition of a company such as BICO would have been more complementary. Their ability to cross-sell to research institutes and R&D departments would be much more likely with a BICO sale than with most of Desktop Metal’s products.

This is a great move for our industry since it insulates us from a potential Desktop Metal bankruptcy or other desperate event in a few months. Now we get a well-capitalized company that will try to remain competitive in vat polymerization and build our binder jet applications. The ExOne business should get a boost, and maybe under new management, the binder jet machines could be improved. Nano Dimension still has a lot of cash, so they could make further acquisitions. I think there could have been better outcomes for Nano Dimension shareholders, but this is simply amazing for anyone else.