DEFA14A: Nano Dimension to Acquire Markforged in $115 Million All-Cash Deal

Nano Dimension announces a definitive agreement to acquire Markforged for $115 million in cash, aiming to create a comprehensive additive manufacturing platform.

Summary

• Nano Dimension has agreed to acquire Markforged for $5 per share in cash, representing a 71% premium to the previous day's closing price.
• The total consideration for the acquisition is $115 million.
• The transaction is fully financed by Nano Dimension's existing cash reserves and is expected to close by the end of the year or early Q1.
• The combined company will have a pro forma revenue of $340 million and $475 million in cash and cash equivalents.
• Nano Dimension aims to create a profitable additive manufacturing platform by integrating Markforged and Desktop Metal.
• The acquisition is subject to Markforged shareholder approval and regulatory approvals.
• Nano Dimension's headquarters will move to Boston, where all three companies (Nano Dimension, Desktop Metal, and Markforged) are located.
• Synergies are expected to result in immediate efficiencies, including cost savings from consolidating three public companies into one.
• Markforged had close to $95 million in sales in 2023, with over 30% being recurring revenue and close to 50% gross margins.

Sentiment

Score: 8

Explanation: The document expresses a positive outlook on the acquisition, highlighting the potential for synergies, improved profitability, and a stronger market position. The management's comments are enthusiastic, and the financial metrics are presented favorably.

Positives

• The acquisition provides Nano Dimension with a comprehensive portfolio of additive manufacturing technologies.
• Markforged brings strong materials expertise, particularly in composite materials and metal replacements.
• The combined company will have a significant scale with $340 million in pro forma revenue.
• Nano Dimension has a strong cash position to support growth and integration.
• The acquisition is expected to improve profitability by increasing gross margins and reducing costs.
• Markforged has a high percentage of recurring revenue, providing a stable revenue stream.
• The acquisition is expected to strengthen Nano Dimension's leadership in the additive manufacturing industry.

Negatives

• The acquisition requires shareholder and regulatory approvals, which could delay the closing.
• Integrating three companies (Nano Dimension, Desktop Metal, and Markforged) may present challenges.
• The company needs to focus on improving profitability, which has been a challenge for the industry.
• There is a risk of product consolidation and potential job losses as a result of the merger.

Risks

• The integration of Markforged and Desktop Metal may be complex and time-consuming.
• The company needs to successfully execute its strategy to improve profitability.
• The additive manufacturing industry is competitive and subject to rapid technological changes.
• The company's success depends on its ability to develop and commercialize innovative products and solutions.
• The company is subject to regulatory risks, including CFUS approval for the acquisition.

Future Outlook

The company aims to create a profitable additive manufacturing platform by integrating Markforged and Desktop Metal, focusing on improving gross margins and reducing costs. They plan to leverage synergies and develop a comprehensive portfolio of products and solutions to lead the industry.

Management Comments

• Yoav Stern (Nano Dimension CEO): 'We are building a comprehensive portfolio for solutions that will enable the combined company to lead this industry and to do it while it is working and improving its profitability.'
• Shai Terem (Markforged CEO): 'We are very proud and excited to join this amazing platform, a lot of innovation that goes into real production application, a very strong balance sheet and scale, we believe we can together lead this industry.'

Industry Context

This acquisition reflects a trend of consolidation in the additive manufacturing industry, as companies seek to build scale and offer a more comprehensive range of products and services. Nano Dimension's acquisition of Markforged positions it to compete more effectively with larger players in the industry, such as Stratasys and 3D Systems.

Comparison to Industry Standards

• The acquisition price of Markforged represents a 71% premium, which is a significant premium compared to other recent deals in the industry.
• Markforged's gross margins of close to 50% are relatively high compared to some other companies in the additive manufacturing industry.
• The combined company's pro forma revenue of $340 million would make it one of the larger players in the additive manufacturing industry, but still smaller than Stratasys.
• Nano Dimension's cash position of $475 million provides it with a significant advantage compared to some of its competitors.

Stakeholder Impact

• Markforged shareholders will receive a significant premium for their shares.
• Employees of Nano Dimension, Markforged, and Desktop Metal may experience changes in roles and responsibilities.
• Customers of all three companies will have access to a broader range of products and services.
• Suppliers of all three companies may see changes in their relationships.
• Creditors of all three companies will be affected by the merger.

Next Steps

• Markforged shareholders need to approve the acquisition.
• Regulatory approvals, including CFUS, need to be obtained.
• Nano Dimension will integrate Markforged and Desktop Metal into its existing operations.
• The company will focus on developing synergies and improving profitability.
• The company plans to rebrand the whole group.

Key Dates

Keywords

Markforged, Nano Dimension, Acquisition, Additive Manufacturing, 3D Printing, Merger, Desktop Metal, Materials, Revenue, Profitability