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Mergers and acquisitions are good for the 3D printing industry

Industry acquisition—3D printer pioneer Stratasys bought Origin—benefits both companies

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Mergers and acquisitions were cruising along at the start of 2020—until the COVID-19 outbreak. Then, like many aspects of life, M&A activity slowed to a jerky roll.

Between Q1 and Q2 2020 “the number of globally announced deals dropped from 11,304 to 8,920, with deal value decreasing from just over $555 billion to about $363 billion,” according to a report published in September by Deloitte/The Wall Street Journal. The financial consulting firm also reported that some companies are resuming, or even accelerating, their M&A activities in preparation of a post-COVID world."

One such company in the additive manufacturing arena is Stratasys Ltd. The 3D printer pioneer, which, in the past eight years bought MakerBot and GrabCAD and merged with Objet, announced Dec. 9 that it plans to acquire startup Origin Inc. The $100 million cash-and-stock arrangement is largely being driven by Stratasys’ interest in Origin’s DLP (digital light processing) technology.

Called Programmable PhotoPolymerization, Origin’s proprietary P3 technology is designed to facilitate the mass production of parts used in the dental, medical, tooling, defense, industrial, and consumer goods sectors. Stratasys expects the technology to boost incremental revenue $200 million annually within five years.

At first glance, the deal seems like a win-win.

“Our customers are looking for additive manufacturing solutions that enable use of industrial-grade resins for the mass-production of parts with process and quality control,” said Stratasys CEO Yoav Zeif in a prepared statement. “We believe Origin’s software-driven Origin One [3D printer] is the best in the industry.”

Origin’s cofounder, Christopher Prucha, added that Stratasys provides an “unparalleled opportunity to significantly expand market reach and enable us to bring our P3 technology to a larger audience.”

There’s sharp disagreement among members of the manufacturing community as to whether M&A action is good or bad for industry.

The positives are that the purchaser immediately acquires new capabilities, taps new revenue streams, and increases market share. Negatives include staff consolidations, dilution of competition, and company cultures that fail to coalesce.

Additive Report contributor Kip Hanson made clear in a recent blog that he’s “no fan of acquisitions,” claiming such deals are “a shortcut to innovation, a shortcut to market share.” He added that he is “especially leery of big investment firms that have no skin in the manufacturing game and are only looking to make a quick buck.”

M&A detractors and supporters could be found at last year’s Formnext, the last in-person trade show I attended. Just days before the November 2019 event held in Frankfurt, Germany, BASF—the world’s largest chemical company—announced that it had purchased 3D printing service bureau Sculpteo.

The owner of a midsize 3D printing company exhibiting at Formnext told me that such acquisitions by multinational behemoths signal the beginning of the end of industry as we know it. These corporations’ deep pockets will quickly bankrupt small players like himself who have limited reserves.

“This year there are 850 exhibitors,” he said of the 2019 show. “Next year there will be 600.” (Neither of us, of course, could have known that Formnext 2020 would be a virtual event with 200 exhibitors because of COVID-19.)

Another attendee, an executive at a 3D printing software company, was stoked by the news. He enthused that major corporations’ entry into the “industry validates the legitimacy of additive as a manufacturing process.”

I agree with the software exec. And I would add that the industry is largely populated by relatively small, innovative companies with limited capital. Major corporations with major dollars to invest are needed to bring these innovations to light, which, in turn, will focus more attention on the additive industry as a whole.

About the Author
FMA Communications Inc.

Don Nelson

Editor-in-Chief

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Don Nelson has reported on and been in the manufacturing industry for more than 25 years.