Inspired in part by the acquisition of EnvisionTEC by Desktop Metal and Origin by Stratasys, we thought about the new hot 3D printing materials and the renewed interest from investors in our markets. Will 2021 be a spectacular year for us? Here we speculate on some merger and acquisition activity we’d like to see in 2021. We will think creatively about the options. See this as an imaginative look at some options.
1. A rollup for 3D printing services
The market for 3D printing services is very fragmented. Service bureaus are typically small and local, with business relying on the trust of other local businesses. In theory, scale and scope would be of great benefit in this industry. Automation, machines and materials are important cost drivers.
A large global player could achieve huge benefits by implementing automation that would significantly reduce the 30% part costs involved in handling. Similarly, a large global player could cut material costs by developing their own 3D printing materials and lowering costs by scaling up. In some cases, a material costs $ 300 per kilo while the base polymer costs, for example, $ 30. A well-capitalized gamer could acquire Shapeways, several local service bureaus, and the 3D printing division of 3D Systems (DDD that the CEO told us in the 3DPOD that he may be selling). The resulting business would be a truly global service bureau that could negotiate well with OEMs and build a global service brand.
2. Combination of ExOne and Voxeljet
ExOne (NASDAQ: XONE) and Voxeljet (NASDAQ: VJET) are essentially aimed at the same customers. Industry, oil and gas, transportation, shipping, and more all use technologies to make inexpensive metal parts. They are often compared with one another individually. In addition, both companies use different versions of the same Binder-Jet process.
The combination of both actors would create a metal and casting service with global locations that could serve the industry well. If we compare the market caps for ExOne ($ 292.80M) and Voxeljet ($ 82.21M), we can see that these companies are undervalued compared to Desktop Metal, despite largely using the same base technology and more revenue achieve. Voxeljet and ExOne stocks have wriggled over the years, but there’s a real chance we can go for desktop metal heights.
3. Acquisition of SLM Solutions by Berkshire Hathaway’s Precision Castparts
Precision Castparts is a large metal components maker that was acquired by Berkshire Hathaway (NYSE: BRK B) for $ 37 billion in 2015. The company manufactures oil and gas, marine, power generation and aerospace metal parts and is uniquely exposed to 3D printing. The use of traditional processes that have been shown to be displaced by additives puts the company at risk if it does not switch to 3D printing.
In the commercial space industry, companies are already rapidly moving to 3D printing new components because they are cheaper, lighter, faster to develop, and can match forged and cast parts. Boeing, GE and the engine manufacturers are already investing heavily in 3D printing. And what could be more contrary at the moment than investing in aviation? A masterpiece to quietly leave the stage, I tell you.
And what could go wrong if you invested in a German metalworking company? Of course, ExOne and Voxeljet might make sense too, but the most sensible thing would be a deal where Berkshire Hathaway bought one of the largest powder bed fusion companies for metals, SLM Solutions, to give it a technological edge and edge in 3D printing as an OEM.
4. EOS for sale to FAM
Now we all know that the Langer family doesn’t want to sell EOS, but what about FAM, the investment fund of the Swedish Wallenberg family? Imagine selling it only partly for cash and partly to become a partner in FAM? FAM owns SKF, Stora Enso and half of the metal powder distributor Höganäs. It also owns AM training company Amexci and IPCO, which have extensive experience in processes and extrusion. The Combient unit is also all about digitization. This would be a diversification for the Langers and would give the Wallenbergs a head start in 3D printing.
5. Roche buys poieitis
Roche is doing well this year due to the high demand for diagnostic tools and tests. Poieitis manufactures two bioprinters and focuses on skin, tissue and tissue models. Bioprinting would be an interesting market for Roche. The skin tissue focus of poieitis shows strong potential synergies with the work of Roche. Much of Roche’s existing customer base would also appreciate a gold standard bioprinter made by a company they know and trust. Poieitis, on the other hand, would need to raise significant additional funds to make clinically-approved products and grow their business so that a good sale without further dilution could make sense to them.