Stratasys Goes Mainstream with MakerBot
Nick is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
After merging with Objet, a 3D printing company, Stratasys (NASDAQ: SSYS) is taking another bold move to acquire MakerBot, a leader in the market of desktop 3D printers. The combination of both companies will create an even greater user experience with a much more diversified offering.
For the acquisition deal, Stratasys will issue 4.76 million shares of its stock to exchange and acquire 100% of the outstanding capital stock of MakerBot, valued at $403 million as of June 19, 2013. MakerBot stakeholders will also receive additional compensation of up $201 million based on the price of Stratasys’ shares on June 19, 2013 through the end of 2014. The transaction is expected to close in the third quarter of 2013.
Unlike its major competitor 3D Systems, (NYSE: DDD) which continues to expand its printing technology into all levels of use including personal, professional and production printing, Stratasys has been focusing on industrial clients prior to the acquisition of MakerBot.
As desktop 3D printers continue to evolve, their use among design and engineering professionals is growing rapidly. As more and more consumers adopt desktop 3D printers for a broad range of applications, Stratasys and MakerBot estimate that the 35,000 to 40,000 desktop 3D printers sold in 2012 will double in 2013, driven by increasing digital 3D content and expanding accessibility and affordability. MakerBot is growing at an amazing speed, where its first quarter revenue of $11.5 million is not far away from its total revenue of $15.7 million for the previous year.
MakerBot’s desktop printers provide affordability and ease of use, which will translate into new growth opportunities for Stratasys. MakerBot also has a growing 3D ecosystem where its platform, Thingiverse.com, allows users to share and customize digital files that can be printed on their 3D printers. In fact, MakerBot had won multiple industry honors for its powerful combination of printers and its 3D printing ecosystem, including Time Magazine’s best inventions of 2012.
The combined Stratasys will offer multiple technology platforms and complementary products. MakerBot can expand its reach and offering by leveraging Stratasys’ global infrastructure and extensive know-how in Fused Deposition Modeling. Both companies are expecting to accelerate their growth after the merge.
While Staples has begun selling 3D Systems’ 3D printers and Amazon has launched a complete 3D printing store aimed at mainstream users, Stratasys needs MakerBot to catch up with 3D Systems in the mainstream consumer market.
3D Systems is not slowing down either in regard to acquisitions. As of June 12, 2013, the company is acquiring 80% of Phenix Systems, a leading global provider of direct metal selective laser sintering 3D printers. With the accelerating demand for direct metal production, 3D Systems is leveraging Phenix Systems' unique direct metal technology to strengthen and expand its offerings into aerospace, automotive, defensive and healthcare manufacturing markets. Both Stratasys and 3D Systems continue to expand through acquisitions.
However, another 3D printing rival, ExOne (NASDAQ: XONE) continues to focus on the industrial end where it has been working with blue chip companies such as BMW, Caterpillar and Ford. ExOne has been implementing additive manufacturing into the production processes at these leading companies globally. ExOne's M-Flex system will provide metal printing capability as well, offering speeds 10 times faster than its previous generation.
The 3D printing industry is expanding rapidly and the ultimate winner is yet to be determined. 3D Systems continues to expand into all fronts while Stratasys continues to shift toward the mainstream to catch up with 3D Systems.
The acquisition of MakerBot completes Stratasys’ offerings and will help the company to expand and leverage its strengths into the desktop 3D printer market. While more competition is expected between Stratasys’ MakerBot and 3D Systems’ 3D printers in the desktop market, both companies will benefit from the increasing awareness of consumers in regard to the expanding market. For now, this optimistic acquisition deal should help Stratasys maintain its high valuation.
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Nick Chiu has no position in any stocks mentioned. The Motley Fool recommends 3D Systems, Stratasys, and The ExOne Company. The Motley Fool owns shares of 3D Systems and Stratasys and has the following options: Short Jan 2014 $36 Calls on 3D Systems and Short Jan 2014 $20 Puts on 3D Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!