01-15-2021: Desktop Metal announced the acquisition of EnvisionTEC in a $300 million deal
Today, Desktop Metal’s market cap is approximately $82 million
On January 15, 2021, one of the most sensational acquisitions in the history of the 3D printing industry took place. Desktop Metal—a company that officially emerged only in 2017 and was better known for raising enormous sums of money from investors than for commercial success—acquired one of the historical leaders in industrial 3D printing worldwide: EnvisionTEC.
The $300 million transaction was supposed to transform the entire market and catapult Desktop Metal to the top of the AM industry. And it did—for a moment. Two weeks later, the company's stock price on the NYSE reached a historic peak of $330 per share. But from there, it was all downhill—both in the stock market and in business. The current share price? $2.45. What went wrong?
Desktop Metal manufactured 3D printing systems for metal using two techniques: bound metal extrusion and binder jetting. The company promised to revolutionize the metal 3D printing market and bring the technology into the realm of serial production for final products and parts. Unfortunately, despite hundreds of millions of dollars poured in by investors, the company struggled to convert that into machine sales. Vision is one thing, revolution is another, but customers weren’t buying the promise as readily as shown in PowerPoint presentations.
So, the idea arose to acquire EnvisionTEC to solve the problem of poor sales numbers. At the time of the acquisition, EnvisionTEC's product sales revenues were over 20 times higher than Desktop Metal’s.
EnvisionTEC was a truly innovative and groundbreaking company in the development of additive manufacturing. Founded in the late 1990s, it created 3D printing technology based on photopolymer resins cured with DLP projectors as the light source. EnvisionTEC 3D printers were widely used across virtually every industry and in medicine. They offered a broad spectrum of resins with diverse properties and applications, many of which were certified for use in specialized applications. However, they were always expensive.
The high price of EnvisionTEC’s 3D printers became the company’s greatest enemy, preventing it from competing effectively—not just with super-cheap Chinese 3D printers but even with U.S.-based Formlabs. EnvisionTEC's market position eroded year after year, as the company watched the competition grow stronger all around.
Desktop Metal acquired EnvisionTEC for $300 million in cash and newly issued shares of Desktop Metal stock. The acquisition was finalized in the first quarter of 2021, and the company was rebranded as ETEC. Additionally, selected assets were used to create a new entity—Desktop Health (which absorbed, for example, EnvisionTEC’s bioprinter).
But that’s all behind us now. Currently, Desktop Metal walks a razor’s edge, balancing precariously in both directions. The legacy of ETEC, Desktop Health, ExOne, and several other smaller companies it acquired is now at risk. If no decisive actions are taken in the first half of this year, no one knows what will happen to all of this.
Source: www.desktopmetal.com