DEFA14A: Nano Dimension to Acquire Desktop Metal for $183 Million, Creating Additive Manufacturing Leader

Nano Dimension will acquire Desktop Metal in an all-cash transaction for $5.50 per share, potentially adjusted down to $4.07, aiming to create a leader in additive manufacturing.

Summary

• Nano Dimension will acquire Desktop Metal in an all-cash transaction for $5.50 per share, subject to possible downward adjustments.
• The total consideration is approximately $183 million, potentially decreasing to $135 million.
• The combined company aims to lead in digital manufacturing with capabilities in mass manufacturing for critical industrial applications.
• The merger unites complementary product portfolios across metal, electronics, casting, polymer, micro-polymer, and ceramics.
• The combined company expects to expand customer penetration and diversify its base, targeting key markets like automotive, aerospace, medical, and R&D.
• The combined company will have over 8,000 installed systems, representing significant opportunities for recurring revenue generation.
• The combined company had 2023 combined revenue of $246 million, with 28% from recurring revenue streams.
• The combination is anticipated to generate in excess of $30 million in run-rate synergies over the next few years.
• The combined company is expected to have a strong cash position, with approximately $665 million to $680 million of projected cash and cash equivalents post-transaction.
• The transaction is expected to close in the fourth quarter of 2024, subject to customary closing conditions.

Sentiment

Score: 7

Explanation: The sentiment is positive due to the strategic rationale of the merger, the potential for synergies, and the creation of a stronger, more diversified company. However, the potential downward adjustments to the purchase price and the risks associated with the transaction temper the overall sentiment.

Positives

• The merger unites complementary product portfolios across metal, electronics, casting, polymer, micro-polymer, and ceramics.
• The combined company expects to expand customer penetration and diversify its base, targeting key markets like automotive, aerospace, medical, and R&D.
• The combined company will have over 8,000 installed systems, representing significant opportunities for recurring revenue generation.
• The combination is anticipated to generate in excess of $30 million in run-rate synergies over the next few years.
• The combined company is expected to have a strong cash position, with approximately $665 million to $680 million of projected cash and cash equivalents post-transaction.

Negatives

• The purchase price may be adjusted downward based on transaction expenses and potential draws on a $20 million secured loan facility.
• Desktop Metal estimates that transaction expenses will be approximately $11 million, which would result in an approximate decrease of $0.44 per share.
• If all reductions occur, the price will be $4.07 per share, a total consideration of $135 million.

Risks

• The ultimate outcome of the proposed transaction is uncertain, including the possibility that Desktop Metals stockholders will reject the proposed transaction.
• The announcement of the proposed transaction could negatively affect the ability of Nano and Desktop Metal to operate their businesses and retain key personnel.
• The timing of the proposed transaction is subject to various factors.
• The occurrence of any event, change, or other circumstance could lead to the termination of the proposed transaction.
• The ability to satisfy closing conditions to the completion of the proposed transaction is not guaranteed.
• The combined company financial information included in this press release has not been audited or reviewed by Nanos auditors and such information is provided for illustrative purposes only.

Future Outlook

The combined company aims to lead in digital manufacturing, focusing on profitability and capitalizing on growth potential through greater scale as the industry continues to shift to AM designed-for-manufacturing applications.

Management Comments

• Yoav Stern: 'Our combination with Desktop Metal is another step in Nano Dimensions evolution to become the leader in digital manufacturing...'
• Ric Fulop: 'Were excited to bring together our pioneering, complementary product portfolios that will further enhance our ability to serve our customers...'

Industry Context

The acquisition reflects a trend towards consolidation in the additive manufacturing industry, with companies seeking to expand their product portfolios, customer base, and technological capabilities to better compete in a rapidly evolving market.

Comparison to Industry Standards

• The combined company aims to compete with established players in the additive manufacturing space, such as 3D Systems and Stratasys.
• The focus on recurring revenue and high-margin solutions aligns with industry trends towards subscription-based models and specialized materials.
• The anticipated synergies and cost savings are typical goals in mergers and acquisitions, aiming to improve profitability and efficiency.

Stakeholder Impact

• Shareholders of Desktop Metal will receive $5.50 per share in cash, subject to potential adjustments.
• Employees of both companies may experience changes as a result of the integration and synergy efforts.
• Customers are expected to benefit from a broader product portfolio and enhanced service offerings.

Next Steps

• Desktop Metal will file a proxy statement with the SEC.
• Desktop Metal shareholders will vote on the proposed transaction.
• The companies will seek required regulatory approvals.
• The transaction is expected to close in the fourth quarter of 2024.

Key Dates

Keywords

acquisition, merger, additive manufacturing, Nano Dimension, Desktop Metal, 3D printing, synergies, recurring revenue, cash position, digital manufacturing