Desktop Metal, a Burlington 3D printing company, has merged with Stratasys – a much larger rival – as consolidation continues to hit the sector following several years of disappointing performance.
Stratasys will exchange 0.123 of their shares for every share in Desktop Metal. In midday trading Thursday, Desktop Metal was valued at less than 600 million dollars. Stratasys will own 59 percent in the combined company.
The price per share is less than Desktop Metal’s stock price a month ago of $2.17, but that was before the company posted disappointing first-quarter results. Since going public by merging with a special purpose acquisition company, or SPAC, in December 2020, Desktop Metal’s stock price has lost more than 90 percent.
“We think both companies are extremely undervalued,” Desktop Metal chief executive Ric Fulop said in an interview. “We’re not selling for cash… Both companies are taking equity in each other because we believe that.”
The companies said the merger would combine Stratasys’s mostly plastic-focused 3D printing technology with Desktop Metal’s focus on other materials including metals, composites, and wood. Combined, they would have over 27,000 customers from Raytheon, Adidas, Toyota and Boston Scientific to name a few. The companies stated that the combined revenue will be $885m this year and grow to $1.1b in 2025.
Consolidation is occurring as the 3D Printing industry has grown slower than expected. Desktop Metal, when it sold SPAC, had projected revenues of $329 Million by 2023. Analysts are now expecting only $218 millions. The company is yet to make a profit. It posted a loss last year of $740 millions and $53 in the first quarter.
Yoav Zif, the chief executive of Stratasys, will remain at the helm of the combined firm after the closing of the deal. This is expected to happen by the year’s end. Fulop will continue to be chair.
The combined companies expect to cut expenses by $50 million, which follows layoffs of 15 percent of Desktop Metal’s workforce in February. Fulop says that future reductions aren’t expected to target Boston-area workers. About 250 out of Desktop Metal’s 1,000 employees are in Massachusetts.
“We are fully committed to growing our position in Boston and have a really strong R&D and technology team in Boston,” he said. “There’s a lot of talent in our area.”
Desktop Metal, founded by Fulop, MIT professors and Ely Sachs (who invented binder jet print), sprayed liquid onto powder layers to create products, was established in 2015.
Aaron Pressman can be reached at [email protected]. Follow him on twitter @ampressman.