Geo Week News

June 20, 2013

3D printer maker Stratasys to acquire rival startup in $403 million stock deal


Rise of the ‘prosumer’ – engineers, manufacturers, and individuals – drives demand for desktop 3D printers

Stratasys Ltd., a major player in the 3D printing and additive manufacturing sector, said Wednesday it will acquire privately owned MakerBot, the largest maker of desktop 3D printers, in a deal worth $403 million in stock.

Under terms of the agreement, expected to close in the third quarter, MakerBot will receive 4.76 million of newly issued SSYS shares – valued at $403 million on Wednesday’s $84.60 closing stock price – representing about 12.3 percent of total outstanding shares issued.

Shares of Stratasys on Thursday closed up $1 to $85.60. The stock’s 52-week range is $43.68-$94.90. Stratasys has market capitalization of $3.27 billion.

Stratasys said the merger will help drive faster adoption of desktop 3D printing for multiple applications and industries by extending the its product line to include a full range of 3D printing capabilities, including 3D desktop printers.

Stratasys and MakerBot estimate between 35,000 to 40,000 desktop 3D printers were sold in 2012, and said that number should double in 2013.

Rise of the ‘Prosumer’

Much of that demand is being fueled by mainstream adoption of the tool across several market segments under a new category of consumer called “prosumers,” which includes engineers, designers, architects, manufacturers, entrepreneurs and individuals, using 3D printers for professional purposes as well as personal applications.

“MakerBot’s 3D printers are rapidly being adopted by CAD-trained designers and engineers,” said David Reis, Stratasys CEO.

Minneapolis, Minn.-based Stratasys (NASDAQ: SSYS) manufactures 3D printers and materials for prototyping and production. Its patented FDM and PolyJet processes produce prototypes and manufactured goods directly from 3D CAD files or other 3D content.

Stratasys’ line of over 130 3D printing materials has been the widest in the industry since June 2012 and includes more than 120 proprietary inkjet-based photopolymer materials and 10 proprietary FDM-based thermoplastic materials.

The company has shipped a cumulative 30,984 systems worldwide as of March 31. Stratasys was formed in 2012 by the merger of 3D printing companies Stratasys Inc. and Objet Ltd., based in Minneapolis, Minn. and Rehovot, Israel.

Startup MakerBot, founded in 2009, pioneered the desktop 3D printing market, selling more than 22,000 3D printers since 2009. In the last nine months, the popular MakerBot Replicator 2 Desktop 3D Printer accounted for 11,000 of those sales.

Stratasys to leverage Fused Deposition Modeling technology for MakerBot line

Stratasys said it wants to accelerate MakerBot’s reach by leveraging its global infrastructure; cross-promotion of products into the installed base of the combined companies; and leveraging its expertise in Fused Deposition Modeling (FDM) to benefit MakerBot’s product line.

Stratasys said the deal will also expand its product offering and make more 3D printing content available through, MakerBot’s online content portal for the sharing of user-generated digital design content, has more than 90,000 3D product files available for sharing, and generates more than 500,000 unique visitors and one million downloads each month.

As part of the merger agreement, Makerbot owners will also get up to an additional 2.38 million shares of Stratasys – worth another $201 million compensation based on the June 19 closing price – under a performance based earn-out provision through the end of 2014. Those payments, if earned, will be made in shares or cash at Stratasys’ discretion.

Last month, Stratasys reported record first quarter earnings of $17.6 million, or $0.43 a share, a 40 percent increase over pro forma results last year, on sales of $98.2 million, up 18 percent.

Stratasys said it intends for MakerBot to operate as a separate subsidiary, maintaining its existing brand and management, including Bre Pettis, CEO and co-founder, who will continue to lead the company.

“The last couple of years have been incredibly inspiring and exciting for us,” said Pettis. “We have an aggressive model for growth, and partnering with Stratasys will allow us to supercharge our mission to empower individuals to make things using a MakerBot, and allow us to bring 3D technology to more people. I am excited about the opportunities this combination will bring to our current and future customers.”

MakerBot generated $11.5 million in revenue for the first quarter of 2013, compared to $15.7 million for all of 2012.

A majority of MakerBot’s sales are via direct-to-consumer channels on the company’s website. MakerBot also sells through distributors outside the U.S. and has the MakerBot store, the first 3D printing retail store, which serves as both a desktop 3D printing demonstration site and brick-and-mortar sales location in New York City.

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