I generally don’t like adding fuel to the rumor mill; however, this possible story certainly caught our attention simply because it makes sense on several fronts. As you are likely aware, one of the world’s largest 3D printing companies, 3D Systems (NYSE:DDD), has seen their shares and subsequent market cap plummet over the last 18 months. With their stock barely able to hold above $20, and the company’s market cap sitting at just over $2.3 billion, their value has dropped over 75% in those 18 months alone.
Last month we published a story which was sparked by comments made by CNBC contributor Dan Nathan on air. Nathan pointed out that on May 7, 2015 there was an abnormal amount of options volume in the stock. Volume was approximately 1.5x higher than the typical daily average, with calls outnumbering puts 2:1. One particular buyer purchased 4,000 June 25-strike calls for $0.40 which translated into a bet that the stock would be trading up at least 13% by the June expiration, or over $25.40. Could it be that some sort of news had been leaked, or perhaps this options activity was simply a lofty bet by an investor with a high risk tolerance.
That’s not all, though. In addition to this abnormal options activity, unconfirmed market chatter pointed to a possible deal in the works. Starting on May 28th rumors began to swirl that 3D Systems had hired Goldman Sachs to handle a possible bid, said to be in the range of $30 to $34 per share, by American multinational conglomerate General Electric (NYSE:GE). While these rumors have now been leaked to several media outlets, they have not been confirmed by either 3D Systems or GE, or Goldman Sachs for that matter. Certainly though, the suggested numbers, timing, and acquiring company do make a lot of sense, making one wonder if perhaps something really has leaked over the last several weeks.
In addition to all of this, the writers and editors here at 3DPrint.com have noticed an abnormal amount of silence from the company’s PR department, and general lack of any major news over the last two months, besides these last few days, coming from the company. Perhaps 3D Systems just does’t have much going on that they care to report, or perhaps their focus is on other more urgent matters–e.g., an acquisition.
While it may be rather pointless to speculate at this point in time, a General Electric acquisition seems to make an extraordinary amount of sense.
3D Systems’ market cap is certainly in a range that would make an all cash acquisition a possibility. With a market cap just over $2.3 billion, General Electric could probably buy out the company for around $3.5 to $4 billion, equating to a mere fraction of their own market cap of $275 billion. Any acquisition for GE would be a drop in the bucket and barely move the needle on their own balance sheet. At the same time, GE is obviously very interested in using 3D printers within various manufacturing processes, specifically in their aerospace division. In fact, the company estimates that they currently have more than 300 3D printers in use. An acquisition of 3D Systems would not only cut out the middle man within several of their manufacturing processes, but instantly provide the company with a new rapidly expanding business as a manufacturer of dozens of different 3D printers.
While it’s not particularly common knowledge, General Electric has had a very close relationship over the past couple years with 3D Systems, using many of their machines, for prototyping as well as producing end-use components.
In late 2013, 3D Systems’ CEO Avi Reichental was quoted by Bloomberg as saying, “We have an excellent relationship with GE at the highest levels, and we’ve been collaborating with them for several years now on a variety of additive manufacturing applications.”
With GE Aviation alone predicting that they will 3D print over 100,000 parts by 2020, it would be quite a stretch to suggest that the company has not at least considered acquiring a 3D printer manufacturer.
It’s anyone’s guess what exactly is in store for either company, and perhaps this is yet another false rumor, but regardless it’s certainly an intriguing one. It will be interesting to watch and see what transpires over the next several weeks. Is GE about to make an offer to buyout 3D Systems? Let us know your thoughts on these rumors in the GE/3D Systems forum thread on 3DPB.com.