A recent spate of acquisitions and mergers in the additive manufacturing industry—some of them major—are already setting the tone for 2021. This month alone, Stratasys announced the acquisition of photopolymer 3D printing company Origin, Desktop Metal revealed its plan to buy EnvisionTEC and, most recently, Protolabs announced the acquisition of 3D Hubs, resulting in the creation of the world’s largest digital manufacturing network. It begs the question, who’s next?
But before speculating, we want to take a look at the recent trend we’ve seen in a broader context. Acquisitions and mergers are nothing new in the additive manufacturing space. The industry’s initial boom was very much influenced by mergers. There was, of course, the Stratasys-Objet merger in 2012, which brought two leading companies together to form a 3D printing behemoth—today, still among the top polymer 3D printing providers. At the same time, 3D Systems was building a reputation for absorbing promising 3D printing entities, such as Z Corp., Vidar Systems and many others. Stratasys also notably acquired MakerBot (for over $600M) in 2013, deepening its role in the consumer AM space.
Mergers in this period, led primarily by Stratasys and 3D Systems, were largely driven by the promise of consumer 3D printing. Today, we have a clearer picture of the potential of consumer AM: far more limited than the industry believed 10 years ago. It is easy to see, in hindsight, that the 3D printing industry was perhaps not mature enough for such consolidation back then.
In 2021, the industry is in a very different place: AM’s real potential now lies in industrial production. No longer is the sector inspired by the idea of “a 3D printer in every home”: companies are delivering reliable, industrial-grade machines and materials that are built to streamline production and create new manufacturing possibilities in areas like aerospace, automotive, energy and healthcare.
The question now is, is the AM industry finally ready for consolidation? The recent moves by major AM players would suggest that perhaps it is. Let’s take a look at the recent acquisitions that could very well be ushering in a new, production-focused era for AM.
Stratasys and Origin
Looking first at the major acquisitions of 2021, we have Stratasys’ acquisition of Origin (finalized in the first days of the year). The companies announced the deal in December 2020, with a transaction up to $100 million, including cash and stock. The impetus of the acquisition is mass production. In short, Stratasys plans to leverage Origin’s photopolymer 3D printing platform—Programmable PhotoPolymerization (P3)—to accelerate the mass production of parts.
Critically, the addition of Origin’s platform to its own portfolio will strengthen Stratasys’ leading position in the polymer AM space, specifically in regards to production applications in industries such as consumer goods, dental, medical and tooling. From a financial perspective, Stratasys expects the acquisition to generate up to $200 million in incremental annual revenue within the next five years.
Desktop Metal and EnvisionTEC
Not two weeks after Stratasys finalized the acquisition of Origin, Desktop Metal revealed its intent to purchase photopolymer 3D printing giant EnvisionTEC. The transaction, expected to be completed in Q1 2021, is worth $300 million, consisting of cash and newly issued Desktop Metal stock. Once the deal is finalized, EnvisionTEC will operate as a wholly-owned subsidiary of Desktop Metal.
This deal is admittedly more of a surprise than Stratasys’ purchase of Origin, as both operate in the polymer AM space. Conversely, Desktop Metal and EnvisionTEC are in totally different areas of the market. Desktop Metal is focused on, well, metal, while EnvisionTEC has long been a leader in DLP-based photopolymerization technology.
As Davide pointed out in his coverage of the deal, there is something to be said for the fact that Desktop Metal recently became listed on the stock market via an acquisition. This could perhaps be indicative that the acquisition by Desktop Metal of EnvisionTEC could be a way for EnvisionTEC (with its substantially greater sales revenues) to join the stock market. The acquisition also enables Desktop Metal to immediately grow its global distribution network, leveraging EnvisionTEC’s well established position in the global industry. With EnvisionTEC as a subsidiary, Desktop Metal will reportedly have a network in 68 countries.
Protolabs and 3D Hubs
Earlier this week, rapid manufacturing giant Protolabs announced it had entered into a definitive agreement to acquire 3D Hubs, another major online manufacturing platform, for $280 million. Once the deal is complete, Protolabs will boast the largest digital manufacturing platform for custom parts.
3D Hubs, which itself has undergone a big transformation in recent years (from peer-to-peer to professional manufacturing platform), has a global network consisting of about 240 premium manufacturing partners. With the acquisition, Protolabs will gain these partners, substantially growing its manufacturing capabilities. Rob Bodor, Protolabs’ current VP and GM of the Americas and incoming President and Chief Executive Officer, said of the deal: “Our combined organizations will provide the market an industry-leading digital manufacturing solution to serve their needs from idea to prototype to full end-use part production. Together we can fulfill nearly every custom manufacturing need across the product life cycle.”
Players on the move
The diversity of these three recent acquisitions—Stratasys and Origin from within the polymer space, Desktop Metal and EnvisionTEC establishing a broader global presence and Protolabs and 3D Hubs from the service side—show that this new phase of industry consolidation is not being driven by one specific area. Across the board, we are seeing companies come together to strengthen their offerings and present compelling solutions for industrial AM production.
Of course, the three aforementioned deals are not the only ones that indicate market maturity. A number of other high-profile acquisitions in recent years have played a part. We can look at GE’s acquisition of metal AM innovator Arcam in 2016, which at the time demonstrated the multinational’s interest and investment in metal 3D printing and has since paid off hugely. More recently, materials giant BASF acquired AM service provider Sculpteo, a move which is enabling BASF to bring new AM materials to market and drive access to its 3D printing solutions and services. In the big picture, it shows that BASF is committed to growing its AM business.
Also on the materials side, polymer materials company Covestro acquired Royal DSM’s Resins & Functional Materials business (RFM), which includes DSM Additive Manufacturing. This merger, which was announced in October 2020, will see Covestro take up a more important position in the AM materials market. (It is worth noting that prior to the acquisition, Royal DSM took over a portion of Clariant’s 3D printing porfolio.) In Europe, the industrial AM service market has consolidated substantially since the merger between BEAMIT and ZARE. The companies announced in August 2020 they were combining their resources to become a single, powerhouse AM service serving the European market. Considering also Sandvik’s 30% stake in BEAMIT, the now much larger AM service is certainly one to watch.
All that to say, the additive manufacturing industry is in the midst of an exciting shift, which will see changing dynamics and, we expect, new levels of growth. We are also highly interested to see what other acquisitions will take shape this year—will we be looking at a much smaller (in terms of individual companies) industry by years end?