Acquisitions, Mergers & PartnershipsAM Industry

Why Stratasys acquired Solid Concepts and Harvest Technologies

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Stratasys entered into definitive agreements to acquire two privately-held companies, Solid Concepts Inc. and Harvest Technologies. Stratasys acquired Solid Concepts, the largest independent additive manufacturing service bureau in North America and a fast-growing partner to RedEye, adding to Stratasys’ existing digital manufacturing service business.

The transactions are expected to be completed early in the upcoming third quarter, subject to customary closing conditions, and are expected to be accretive to Stratasys’ Non-GAAP earnings per share within the first 12 months after closing. Upon completion of the transactions, Stratasys will combine Solid Concepts and Harvest Technologies with RedEye to establish one additive manufacturing services business unit. Joe Allison, President of Solid Concepts, will join the Stratasys management team and lead the combined parts business, supported by the strong management teams of Solid Concepts, Harvest Technologies, and RedEye.

Solid Concepts and Harvest Technologies are leading providers of additive manufacturing services. With the addition of Solid Concepts and Harvest Technologies, Stratasys is creating a leading strategic platform focused on meeting customers’ additive manufacturing needs through an expanded technology and business offering.

Terms of the transaction

Solid Concepts and Harvest Technologies provide Stratasys with significant manufacturing and end-use parts production capabilities, infrastructure, capacity and process knowhow, which are expected to accelerate and enable further adoption of additive manufacturing. The combination of Solid Concepts’ deep knowledge of manufacturing and vertical focus, such as medical and aerospace, and Harvest Technologies’ experience in parts production, as well as materials and systems knowhow, together with RedEye, strengthens Stratasys’ direct digital manufacturing and parts production expertise.

Stratasys acquired Solid Concepts Solid Concepts, based in Valencia, California, is an industry pioneer, having provided additive manufacturing solutions to customers since its founding in 1991. Solid Concepts has developed extensive U.S.-based capacity and infrastructure with six U.S. facilities staffed by approximately 450 employees. Solid Concepts maintains a broad variety of technology platforms and processes for additive manufacturing and serves a diverse customer base across a wide range of verticals, including medical, aerospace, and industrial, among others. Solid Concepts provides an overarching platform that, with the integration of Harvest Technologies and RedEye, is expected to create a comprehensive additive manufacturing solution provider. Solid Concepts generated revenues of approximately $65 million in 2013.

Harvest Technologies, based in Belton, Texas, is a specialty additive manufacturing service bureau established in 1995, with approximately 80 employees. Harvest Technologies has deep manufacturing process know-how and focuses on advanced end-use parts applications. Harvest Technologies was the first additive manufacturing company in North America to become AS9100/ISO 9001 certified, and continues to produce end-use parts for multiple industries.

Under the terms of the definitive agreement with Solid Concepts, Stratasys will acquire Solid Concepts for total consideration of up to $295 million, including a payment on closing of $172 million (or, if settled in cash, part on closing and part six months after closing), deferred payments of $60 million and up to $63 million in retention-related payments. Subject to certain requirements for cash payments, Stratasys retains the discretion to settle any of the amounts payable under both the definitive agreement and the retention plan in either Stratasys shares, cash or any combination of the two. The value of a portion of the purchase price, as well as the deferred and retention-related payments, may increase or decrease in line with the market price of Stratasys shares.

Under the terms of the definitive agreement with Harvest Technologies, Stratasys will acquire Harvest Technologies for an undisclosed amount, including retention-related payments, payable in cash, shares or a combination thereof.

Stratasys acquired Solid Concepts “We are pleased to announce these strategic transactions, which will enable us to provide customers with a comprehensive offering that addresses a broad spectrum of additive manufacturing solutions,” said Stratasys CEO David Reis. “With Solid Concepts and Harvest Technologies, together with RedEye, we expect to create a strategic platform to meet our customers’ additive manufacturing requirements by significantly expanding our offering, targeting new applications, and strengthening our customer relationships. As our customers’ requirements continue to expand, we must evolve to create full service offerings that provide a variety of technologies and custom manufacturing solutions and focus on high-end production applications. Solid Concepts and Harvest Technologies are industry pioneers and innovators in the additive manufacturing space. In acquiring these two unique companies, Stratasys is gaining a broad solutions offering with technologies and decades of application and manufacturing experience which, together with RedEye, are expected to create an industry-leading additive manufacturing and parts production platform.”

“These transactions are consistent with our core strategic imperatives and M&A strategy, which is focused on acquiring leading companies to support our goal of continued leadership in the segments in which we operate, as well as reaching new niche verticals,” Mr. Reis continued. “We will apply our integration expertise to combine Solid Concepts and Harvest Technologies with our existing RedEye digital manufacturing service business to form a single business unit focused on additive manufacturing services. Importantly, with our shared cultures of innovation and customer service, we believe this will be a smooth transition. We look forward to welcoming the talented teams of Solid Concepts and Harvest Technologies to Stratasys – we are confident we have a very bright future together.”

Joe Allison, President of Solid Concepts, said, “We are excited to be joining forces with Stratasys, a global leader in 3D printing and additive manufacturing. As part of a larger company with a broad customer reach and market coverage, Solid Concepts will be even better positioned to meet the significant demand for our additive manufacturing offerings. We look forward to working with Stratasys to ensure a smooth and orderly integration of our businesses.”

David K. Leigh, President of Harvest Technologies, said, “We are delighted to join forces with Stratasys and Solid Concepts in a transaction that will enhance Harvest Technologies’ leadership in producing end use parts using the most advanced additive manufacturing technologies and processes.”

Why Stratasys acquired Solid Concepts and Harvest Technologies

Benefits of the transaction include the creation of a leading strategic platform to meet a broad range of customers’ additive manufacturing needs. The acquisitions of Solid Concepts and Harvest Technologies provide Stratasys with the ability to offer customers a more comprehensive solution based on multiple technologies that address a broad spectrum of additive manufacturing needs. The combination of Solid Concepts’ deep knowledge of manufacturing and vertical focus, such as medical and aerospace, and Harvest Technologies’ experience in parts production, as well as materials and systems knowhow, strengthens Stratasys’ direct digital manufacturing and parts production expertise.

The deal provides Stratasys opportunities to leverage significant manufacturing services capabilities. With their capacity, knowledge and experience, Solid Concepts and Harvest Technologies are expected to allow Stratasys to expand into a broad range of capabilities and applications expertise across a wide range of new and existing applications. The strong and experienced management teams of Solid Concepts and Harvest Technologies, combined with RedEye, provide deep process knowhow around using additive manufacturing for production applications.

Finally, the new structure will create opportunity for cross-selling synergies. Once Solid Concepts and Harvest Technologies, together with RedEye, have been integrated into a single business unit, Stratasys will leverage cross sell opportunities that are expected to generate long-term synergies with the company’s system business. All this comes with compelling financial benefits. Both Solid Concepts and Harvest Technologies have strong financial track records. The transactions are expected to be accretive to Stratasys’ non-GAAP earnings per share within the first 12 months after closing.

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Davide Sher

Since 2002, Davide has built up extensive experience as a technology journalist, market analyst and consultant for the additive manufacturing industry. Born in Milan, Italy, he spent 12 years in the United States, where he completed his studies at SUNY USB. As a journalist covering the tech and videogame industry for over 10 years, he began covering the AM industry in 2013, first as an international journalist and subsequently as a market analyst, focusing on the additive manufacturing industry and relative vertical markets. In 2016 he co-founded London-based 3dpbm. Today the company publishes the leading news and insights websites 3D Printing Media Network and Replicatore, as well as 3D Printing Business Directory, the largest global directory of companies in the additive manufacturing industry.

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