DM
Desktop Metal, INC
NYSE
DEFA14A: Nano Dimension to Acquire Desktop Metal in $183 Million Deal, Creating Additive Manufacturing Powerhouse
Sentiment:
Merger Announcement
3 July 2024 4:24 PM
Nano Dimension and Desktop Metal announced a definitive agreement for Nano Dimension to acquire Desktop Metal for $183 million, aiming to create a leading, well-capitalized company in the additive manufacturing industry.
Worse than expected
The combined company expects negative cash flow for the next six to eight quarters.
Delay expected
The transaction is expected to close at the end of the year, but based on delays, maybe a few months later.
Summary
- Nano Dimension is set to acquire Desktop Metal for $5.50 per share in cash, valuing the deal at approximately $183 million.
- The acquisition aims to create a leader in the additive manufacturing space with a combined revenue of $246 million (based on 2023 pro forma figures) and substantial cash reserves of around $680 million.
- The combined company will leverage complementary technologies, including Desktop Metal's binder jetting and Nano Dimension's inkjet electronics and microfabrication capabilities.
- Synergies are expected in go-to-market strategies and customer bases, focusing on converting top-line growth into bottom-line profitability.
- The transaction is anticipated to close by the end of the year, subject to regulatory approvals and Desktop Metal stockholder approval.
- The combined entity will have a global presence, allowing for consolidation of facilities and reduction of overhead costs.
- The company expects negative cash flow for the next six to eight quarters but anticipates improvement through revenue synergies and cost reductions.
- Management teams from both companies will be integrated, with Yoav Stern as CEO of the combined entity and Ric Fulop joining the C-suite and board.
- Nano Dimension holds a strategic investment in Stratasys and maintains a friendly relationship with its management, exploring potential cooperation.
- The acquisition price may be adjusted downwards based on Desktop Metal's transaction expenses and potential utilization of a working capital loan from Nano Dimension.
Sentiment
Score: 7
Explanation: The document expresses optimism about the acquisition's potential to create a leading company in the additive manufacturing industry. While acknowledging challenges such as negative cash flow in the short term, the overall tone is positive due to the expected synergies, cost reductions, and growth opportunities.
Positives
- The acquisition creates a well-capitalized leader in the additive manufacturing industry.
- The combined company has complementary technologies with zero overlap in product portfolios.
- There are significant cross-selling opportunities between the two companies' customer bases.
- The combined company has a strong global presence, allowing for cost savings through facility consolidation.
- The management teams from both companies will be integrated, bringing together expertise and experience.
- Nano Dimension has a strategic investment in Stratasys, fostering potential cooperation within the industry.
- The combined company has a strong patent portfolio with over 1,000 patents covering various additive manufacturing technologies.
- Nano Dimension achieved significant double-digit organic growth last year, indicating strong business management.
- The acquisition provides Desktop Metal with access to Nano Dimension's strong balance sheet and cash reserves.
- The combined company will have a significant installed base of printers, providing a large customer base for cross-selling.
Negatives
- The acquisition price may be adjusted downwards based on Desktop Metal's transaction expenses and potential utilization of a working capital loan from Nano Dimension.
- The combined company expects negative cash flow for the next six to eight quarters.
- The transaction is subject to regulatory approvals and Desktop Metal stockholder approval, which could delay or prevent the closing.
- Integrating the two companies and achieving the expected synergies will take time and effort.
- There may be some employee nervousness due to the merger, requiring careful management of the integration process.
- Desktop Metal has had to cut expenses in sales and marketing due to industry conditions, which may need to be rebuilt.
- The combined company will need to manage the integration of different management styles and corporate cultures.
- The company will need to address the convertible bonds outstanding in Desktop Metal.
- The company will need to navigate potential pushback from shareholders regarding the acquisition.
Risks
- The ultimate outcome of the proposed transaction between Desktop Metal and Nano is uncertain, including the possibility that Desktop Metal's stockholders will reject the proposed transaction.
- The announcement of the proposed transaction could negatively affect Desktop Metal's ability to operate its business and retain key personnel.
- The timing of the proposed transaction is uncertain and could be delayed.
- The occurrence of any event, change, or other circumstance could give rise to the termination of the proposed transaction.
- The ability to satisfy closing conditions to the completion of the proposed transaction is not guaranteed.
- There are risks related to the completion of the proposed transaction and actions related thereto.
- The company faces risks described in Nano's and Desktop Metal's filings with the SEC, including risks related to their respective businesses and industries.
Future Outlook
The combined company aims to convert top-line growth into bottom-line profitability within the next two years, leveraging synergies and cost reductions. They anticipate a negative cash flow for the next six to eight quarters but expect improvement through revenue synergies and cost reductions. The company plans to continue to consolidate the additive manufacturing industry through further acquisitions.
Management Comments
- Yoav Stern: 'We are very excited today. It's a very exciting event.'
- Yoav Stern: 'We are not going to use this cash just to grow. We are going to use this cash to improve and deliver dollars to the bottom line.'
- Ric Fulop: 'This is a seminal transaction that's going to mark the move for a lot of new activity that will happen over the next two years.'
- Ric Fulop: 'This is forming one of the largest companies in our market, well over 1,000 patents.'
- Yoav Stern: 'This change for our employees is a change for the better. We are not a company in the past that we buy and we tap costs in order to deliver. That's not our--this is not a rollup. We buy and build, B&B.'
Industry Context
This acquisition reflects a trend towards consolidation in the additive manufacturing industry, where many companies are not yet profitable. The combined entity aims to be a leader in the industry, well-capitalized and positioned for growth in the mass production of additive manufacturing components. The deal is seen as a landmark transaction that could spur further consolidation in the sector.
Comparison to Industry Standards
- The document mentions that many companies in the additive manufacturing industry are not yet profitable, highlighting the need for consolidation and improved business models.
- The combined company's revenue of $246 million and cash reserves of $680 million position it as one of the largest and best-capitalized players in the industry.
- The document notes that Nano Dimension achieved significant double-digit organic growth last year, outperforming other publicly traded companies in the space.
- The company's focus on mass production applications differentiates it from competitors focused on prototyping and tooling.
- The document compares the consolidation in the additive manufacturing industry to the consolidation that occurred in the airline industry, where the number of aircraft manufacturers decreased significantly.
Stakeholder Impact
- Shareholders of Desktop Metal will receive $5.50 per share in cash.
- Employees of both companies may experience some nervousness due to the merger, but the company aims to create a positive environment.
- Customers of both companies will benefit from a broader range of products and services.
- Suppliers of both companies may see changes in their relationships as the combined company consolidates its supply chain.
- Creditors of Desktop Metal will need to be addressed, particularly regarding the convertible bonds.
Next Steps
- Obtain regulatory approvals, including CFIUS and HSR.
- Secure Desktop Metal stockholder approval.
- Integrate the management teams and operations of the two companies.
- Develop a detailed plan for delivering dollars from the top line to the bottom line.
- Continue to explore potential cooperation with Stratasys.
- Address the convertible bonds outstanding in Desktop Metal.
Key Dates
- July 3, 2024: Date of the joint conference call announcing the agreement for Nano Dimension to acquire Desktop Metal.
- December 31, 2023: Reference date for pro forma revenue figures and cash balances.
- End of Year: Expected closing date of the transaction, subject to regulatory approvals.
- 2025: Potential need for Desktop Metal to tap into a financing facility extended by Nano Dimension.
Keywords
acquisition, additive manufacturing, Desktop Metal, Nano Dimension, merger, 3D printing, synergies, cash, revenue, binder jetting, inkjet electronics
DM
Desktop Metal, INC
NYSE
Sector: TBD
Filings with Classifications
Worse than expected
26 March 2025 5:20 PM
8-K Filing
- Revenue decreased from $189.7 million to $148.8 million year-over-year.
Worse than expected
31 October 2024 7:00 AM
Quarterly Report
- The company's revenue decreased by 15% year-over-year.
- The company reported a net loss of $35.4 million for the quarter and $191.0 million for the first nine months.
- The company's gross margin, while improved, is still relatively low at 9%.
Capital raise
31 October 2024 7:00 AM
Quarterly Report
- The company may need to raise additional capital through arrangements with Nano or from other sources, including equity and debt financings.
- The company has a multi-draw term loan credit facility with Nano for up to $20 million, available after January 7, 2025.
- The company may need to issue additional shares of capital stock or offer debt or other equity securities if the merger is not completed.
Worse than expected
23 September 2024 4:24 PM
Proxy Statement
- The company warns of potential dilutive financings or bankruptcy if the merger fails.
- Desktop Metal expects to run out of cash by the end of the first quarter of 2025 if the merger is not approved.
Capital raise
13 September 2024 4:02 PM
Proxy Statement
- The document mentions that if the merger is not approved, Desktop Metal may need to undertake financings.
- These financings may be severely dilutive to stockholders.
Worse than expected
13 September 2024 4:02 PM
Proxy Statement
- The company expects to run out of cash by the end of the first quarter 2025 if the merger is not approved.
- The company may need to undertake financings that may be severely dilutive to stockholders if the merger is not approved.
- There is a risk of bankruptcy if the merger is not approved.
Worse than expected
6 September 2024 4:38 PM
Proxy Statement
- Desktop Metal expects to run out of cash by the end of the first quarter of 2025 if the merger is not approved.
Capital raise
15 August 2024 7:00 AM
Definitive Proxy Statement
- The merger agreement includes a provision for a multi-draw term loan credit facility (Bridge Loan Facility) from Nano to Desktop Metal, up to $20 million, to provide working capital and liquidity.
Worse than expected
31 July 2024 4:15 PM
Earnings Conference Call Transcript
- The company's Q2 2024 revenue was down compared to the previous year.
- The company's non-GAAP gross margins were down compared to the previous year.
- The company's adjusted EBITDA was negative.
Worse than expected
30 July 2024 4:53 PM
Quarterly Report
- The company's revenue decreased by 27% compared to the same quarter last year.
- The company's gross margin was -83%, indicating significant losses on sales.
- The company's net loss increased significantly compared to the same quarter last year.
Capital raise
30 July 2024 4:53 PM
Quarterly Report
- The company plans to raise additional capital through a combination of potential options, including equity and debt financings.
- Nano Dimension agreed to provide a multi-draw term loan credit facility in an aggregate principal amount not to exceed $20.0 million, subject to certain conditions.
Worse than expected
30 July 2024 4:36 PM
Quarterly Report
- Revenue decreased from $53.3 million to $38.9 million compared to the same quarter last year.
- The company reported a net loss of $(103.4) million.
Worse than expected
30 July 2024 4:35 PM
Quarterly Report
- The company's revenue decreased significantly year-over-year.
- The company reported a substantial net loss, primarily due to one-time non-cash charges.
- The company's GAAP gross margin was negative, indicating poor profitability.
Delay expected
3 July 2024 4:24 PM
Merger Announcement
- The transaction is expected to close at the end of the year, but based on delays, maybe a few months later.
Worse than expected
3 July 2024 4:24 PM
Merger Announcement
- The combined company expects negative cash flow for the next six to eight quarters.
Delay expected
3 July 2024 7:32 AM
Merger Announcement
- The closing of the transaction is expected in the fourth quarter of 2024, but is subject to customary closing conditions, including regulatory approvals, which could cause delays.
Worse than expected
3 July 2024 7:32 AM
Merger Announcement
- The final purchase price is subject to downward adjustments based on transaction expenses and potential draws on a loan facility, which could reduce the value of the deal for Desktop Metal shareholders.
Capital raise
3 July 2024 7:32 AM
Merger Announcement
- Nano Dimension has committed to providing Desktop Metal with a $20 million secured loan facility if the closing of the transaction extends into 2025.
- The purchase price may be adjusted based on the amount drawn from the loan facility prior to closing.
Worse than expected
9 May 2024 6:02 AM
Quarterly Report
- The company's revenue decreased by 2% year-over-year, indicating worse than expected sales performance.
- The company reported a gross loss of $2.2 million, indicating worse than expected profitability.
- The company's net loss of $52.1 million was significant, indicating worse than expected financial results.
Capital raise
9 May 2024 6:02 AM
Quarterly Report
- The company entered into an Open Market Sale Agreement with Cantor Fitzgerald & Co. to sell shares of common stock for an aggregate offering price of up to $75.0 million.
- The company may need to further increase its capital resources by issuing additional shares of its capital stock or offering debt or other equity securities.
Better than expected
9 May 2024 6:00 AM
Quarterly Report
- The company's adjusted EBITDA improved by 44% year-over-year, indicating better than expected cost management.
- Non-GAAP operating expenses decreased for nine consecutive quarters, showing better than expected cost control.
- Cash consumption decreased by 47% year-over-year, demonstrating better than expected cash management.
Capital raise
23 April 2024 7:15 AM
Proxy Statement
- The company may offer common and preferred stock, debt securities, warrants, and units of up to $250.0 million in the aggregate under a shelf registration statement.
- The company may sell shares of its Class A common stock having aggregate sales proceeds of up to $75.0 million pursuant to an at the market offering program.
- The company intends to raise capital through equity or debt financing to fund its current operations.
Worse than expected
23 April 2024 7:15 AM
Proxy Statement
- The company needs to implement a reverse stock split to regain compliance with the NYSE minimum bid price requirement, indicating that the share price has fallen below acceptable levels.
Capital raise
15 March 2024 4:12 PM
Annual Results
- The company may need to further increase its capital resources by issuing additional shares of its capital stock or offering debt or other equity securities.
- The company may not be able to obtain additional financing on terms favorable to it, if at all.
Worse than expected
15 March 2024 4:12 PM
Annual Results
- The company experienced a net loss of $323.3 million in 2023, which is worse than the previous year.
- The company's revenue decreased by 9% in 2023 compared to 2022.
- The company's gross profit decreased by $25.2 million in 2023 compared to 2022.
Better than expected
15 March 2024 7:00 AM
Quarterly Report
- The company's net loss significantly decreased year-over-year, indicating improved financial performance.
- Adjusted EBITDA showed a substantial improvement, reaching the company's strongest quarterly performance to date.
- Non-GAAP gross margins improved significantly year-over-year.
Worse than expected
24 January 2024 8:05 AM
Strategic Business Review
- The company is implementing a significant workforce reduction and restructuring plan, indicating that the current financial performance is worse than expected.
- The company is facing a downturn in the additive manufacturing industry and a softer demand environment, which are contributing to the need for these cost-cutting measures.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.