In another huge, highly significant development in 3D printing M&A, it has been announced that commercial-grade printer-maker Stratasys will acquire consumer-grade manufacturer, MakerBot. Following Stratasys’ merger with Objet, the transaction will mark the second major industry consolidation maneuver by the former in less than a year.
The acquisition is a sure sign not only that early mover MakerBot is all grown up, but that the very industry itself, is entering adolescence. Though an infant in the eyes of the masses, the additive manufacturing industry is more than 20 years old, and, with the growth of companies like Stratasys and 3D Systems in the mix, has bona fide behemoths.
The dollars involved speak for themselves: The Motley Fool estimated the total potential value of the deal at $604 million, or 7.14 million new shares. The initial purchase value of $403 million (4.76 million shares) may be sweetened by a $201 million (2.38 million) performance bonus deal that would add an additional earn-out for MakerBot transferees while also negating the 18.5% share dilution initially heaped upon Stratasys shareholders.
Though the initial offering is believed to be based heavily upon MakerBot’s name cachet (the company holds an estimated 9% market share of worldwide desktop printer sales, based on 2013 figures), some are saying that performance bonus growth targets are aggressive. Yet, these targets may be fundamentally driven by competitive necessity—if Stratasys wishes to sideline 3D Systems, it must quickly, thoroughly, and successfully, enter the consumer printer game.
Still, it has yet to be determined whether MakerBot’s early success can be transported to the Stratasys model. Beyond questions about how MakerBot values and culture (which has been likened to Apple, a comparison we don’t necessarily agree with) will fare in the presence of a major corporate backer (which has been likened to IBM, which we basically do agree with) are questions about how the many FDM patents owned by Stratasys be leveraged to enhance the MakerBot offering.
The natural assumption is that MakerBots will become cheaper, require shorter lead times, and sell at higher volume due to Stratasys’ manfacturing efficiencies and economies of scale. Yet the retention of that special magic that made MakerBot so successful and the seizure of new opportunities may be mutually exclusive.
There are other competitive challenges, such as the positioning and brand perception of known-factor competitors like 3D Systems’ CubeX, not to mention the entry of many newer, sleeker, feature-heavy desktop printers such as those made by smaller companies like Type A Machines, Affinia, and UltiMaker. In other words, the road ahead of Stratasys is long, and may be treacherous; but, acquiring MakerBot was a step in the right direction.
Photo credit: Core77