On October 3, 2024, a significant step in the consolidation of the additive manufacturing (AM) industry was taken when stockholders of Desktop Metal, Inc. (NYSE: DM) approved the company’s merger with Nano Dimension Ltd. (Nasdaq: NNDM). This approval marks a crucial milestone in the process, with the transaction expected to close in the fourth quarter of 2024, pending final regulatory approvals.

At a special stockholder meeting, 60% of the approximately 33 million outstanding Desktop Metal shares were cast in favor of the merger. An overwhelming 96% of the votes from participating shares supported the agreement, signaling strong stockholder confidence in the merger’s potential. This approval paves the way for Nano Dimension to acquire Desktop Metal, pending a few remaining regulatory hurdles.

A Growing AM Powerhouse

The merger with Desktop Metal is just one part of Nano Dimension’s larger strategy to dominate the AM industry. Last month, the company announced its intended acquisition of Markforged Holding Corporation (NYSE: MKFG), Desktop’s nearest rival in metal 3D printing. The combined strength of Nano Dimension, Desktop Metal, and Markforged is expected to create a substantial player in the AM sector, with combined revenue projections of $340 million based on 2023 data.

Binder jet metal parts made by Desktop Metal. Image courtesy of Desktop Metal.

Both acquisitions place Nano Dimension in a favorable position to lead the rapidly growing market, competing against established giants such as HP and GE in metal AM. The addition of Markforged’s over 15,000 installed systems and the strength of Desktop Metal’s binder jetting and filament-based metal technologies significantly broaden Nano Dimension’s capabilities.

Ric Fulop, Desktop Metal’s Founder and Chief Executive Officer, said, “We are pleased that our stockholders, who have supported Desktop Metal over the years, are accepting the recommendation of our board of directors. This industry needs the combination of great products and technologies with a strong balance sheet to become self-sustaining. The agreement to combine with Nano Dimension is the best offer for stockholders to realize value from their current holdings in Desktop Metal. We appreciate the support of our stockholders.”

Yoav Stern, Nano Dimension’s Chief Executive Officer and member of the Board of Directors, said: “We are another step closer to closing the acquisition of Desktop Metal and building a strong, new leader in the digital manufacturing space. Now, Nano Dimension will stay focused on obtaining the necessary regulatory approvals and finalizing post-merger integration plans which will enable us to close this deal and move the new business forward as soon as possible. The further business combination expected to close soon thereafter with Markforged reinforces the goal to build up a profitable industry leader.”

Strong Q3 2024 Financials Reflect Core Business Momentum

Alongside the merger news, Nano Dimension announced strong preliminary results for Q3 2024, with revenues of $14.7 million—a 21% increase compared to Q3 2023. Stern took the opportunity to assure shareholders that despite the recent flurry of merger and acquisition activity, the core business continues to thrive.

Yoav Stern, said: “With all this energy about our agreements to acquire Desktop Metal, Inc. and Markforged Holding Corporation, let’s not forget the performance of our core business, which posted preliminary results of $14.7 million. The 21% growth year-over-year characterizes the efforts of our team to continue to stay focused on revenue generation and delivering added value to our customers. Our shareholders should have confidence that the Nano Dimension teams are not taking their eyes off the ball.”

Financially, Desktop Metal has faced significant challenges, with a trailing twelve-month loss of over $376 million and a negative profit margin of 215.57%. This merger is seen as an opportunity for Desktop Metal to stabilize its operations under Nano Dimension’s leadership, leveraging the latter’s $763.8 million cash reserves and market position, despite Nano Dimension’s own challenges with profitability. The merger aims to unlock synergies that will strengthen both companies’ market positions and financial outlooks in the 3D printing sector.

The merger approval between Desktop Metal and Nano Dimension has generated a notable reaction in both companies’ stock prices, reflecting investor sentiment about the transaction and the potential growth opportunities. As of October 3, 2024, Desktop Metal’s stock price rose by 4.56%, reaching $4.93 per share following the stockholder vote in favor of the merger. Nano Dimension’s stock also showed positive movement, increasing by 2.35% to $2.40 per share on the same day. Investors appear to be encouraged by the strategic benefits of the acquisition.

What Comes Next?

With the final regulatory approvals anticipated later this year, Nano Dimension expects the Desktop Metal acquisition to close by the end of 2024. Post-merger integration will be key to realizing the full potential of this deal, particularly as Nano Dimension continues to consolidate its recent acquisitions.

Once the merger is finalized, the combination of Nano Dimension, Desktop Metal, and Markforged will position the company as a dominant player in the AM space, offering a wide array of technologies ranging from additively manufactured electronics to metal binder jet and composite 3D printing. As reported by TCT Magazine, Nano Dimension will rebrand and take on a new name that better reflects the broad scope of the company’s portfolio.

If the mergers all go through, the resulting entity would boast four out of the seven categories of 3D printing listed by ASTM International, plus some technologies that are hard to categorize in the first place. All that would be missing are powder bed fusion and directed energy deposition. So, we may want to keep an eye out for some smaller players in those spaces. And, if it’s based on Nano’s strategy to date, a limping SPAC company would be the way to go. See the table below:

Desktop Metal’s largest shareholder, Iranian-American billionaire Farhad Fred Ebrahimi, owns about 18.68% of Desktop, as well as 4.98% of Israeli-American 3D printing stalwart Stratasys. Nano Dimension, meanwhile, maintains a 14.02% interest in Stratasys. ARK Investment Management LLC, which helped kick off a lot of activity in these SPAC companies, has 10.18% of Markforged shares​, while Ric Fulop’s former employer North Bridge Venture Partners holds around 14.7% in Markforged.

It’s interesting to think that all of this resulted from a domino effect that began with COVID-19 bringing attention to the key role 3D printing will play in supply chain resilience through to the rise and fall of SPAC companies. If it weren’t for Desktop Metal kicking off the SPAC era of AM and rolling up key players ExOne and EnvisionTEC, Nano Dimension’s deal would be much less impressive. In fact, it would be about 4.8 times less impressive. Nano Dimension was able to time its acquisitions near the bottom values of Desktop Metal and Markforged—right before economic recovery has begun to take place. Whereas Desktop Metal paid a combined total of $875 million for the acquisitions of ExOne and EnvisionTEC, Nano Dimension will be paying just $183 million for all three firms (plus some others) for a roughly 80 percent discount. It turned out to be a shrewd, well-orchestrated move.

One final thought worth considering is the increasing role that 3D printing plays in frontline military operations. With the ability to create improvised weaponry and repairs near the field of battle, AM is becoming crucial for military edge. While the conflict in Ukraine has demonstrated the possibilities in this regard, the conflict in the Middle East that recently expanded into Israel, Lebanon, and Iran has potentially more dangerous implications globally. In a world where it’s possible to 3D print both electronics and explosives, there may be a lot more at stake than is immediately apparent. The collapse of Desktop Metal’s value, leading to Nano Dimension acquiring it at a fraction of its worth, aligns with a larger consolidation strategy that could see 3D printing technologies deployed in ways we’ve yet to fully grasp. If 3D printing truly becomes integral to supply chains and military logistics, those holding the reins of these companies could stand to gain enormously—financially and geopolitically.