The Stratasys and Desktop Metal logos.Stratasys (Nasdaq:SSYS) and Desktop Metal (NYSE:DM) plan to combine in a $1.8 billion all-stock transaction, the 3D printing companies said today.

The companies estimate they will generate $1.1 billion in 2025 revenue after the merger and said they expect the additive manufacturing industry to grow to $100 billion by 2032.  Stratasys and Desktop Metal both serve medical device developers and the broader healthcare industry.

“The transaction unites the polymer strengths of Stratasys with the complementary industrial mass production leadership of Desktop Metal’s brands, creating an additive manufacturing company that is expected to be well-positioned to serve the evolving needs of customers in manufacturing,” the companies said in a news release.

Stratasys CEO Yoav Zeif will remain chief executive of the company, while Desktop Metal co-founder, CEO and Chair Ric Fulop will serve as the combined company’s board chair.

Stratasys Chair Dov Ofer will serve as lead independent director of the new 11-member board. Stratasys and Desktop Metal will each select five board members.

The deal is expected to close in the fourth quarter of 2023, subject to shareholder and governmental approval. Stratasys shareholders will own approximately 59% of the company; Desktop Metal shareholders will own the rest.

The companies expect more than half of their combined sales will come from end-use-parts manufacturing and mass production.

Stratasys and Desktop Metal said they have invested more than $500 million in R&D in the last four fiscal years, and together will have more than 800 scientists and engineers.

The combination could result in layoffs, however, as the companies project $50 million in annual savings “due primarily to cost reductions in sales, general and administrative expenses, supply chain management and optimization of operational processes.”

Both companies today reaffirmed their latest financial guidance.

What the CEOs said

Zeif said the merger “will accelerate our growth trajectory by uniting two leaders to create a premier global provider of industrial additive manufacturing solutions.”

“With attractive positions across complementary product offerings, including aerospace, automotive, consumer products, healthcare and dental, as well as one of the largest and most experienced R&D teams, industry-leading go-to-market infrastructure and a robust balance sheet, the combined company will be committed to delivering ongoing innovation while providing outstanding service to customers,” he continued. “We look forward to building on the complementary strengths of the combined business and leveraging the strong brand equity across the portfolio to deliver enhanced value to shareholders, customers and employees.”

Fulop, meanwhile, called the deal “a landmark moment for the additive manufacturing industry.”

“The combination of these two great companies marks a turning point in driving the next phase of additive manufacturing for mass production. We are excited to complement our portfolio of production metal, sand, ceramic and dental 3D printing solutions with Stratasys’ polymer offerings. Together, we will strive to build an even more resilient offering with a diversified customer base across industries and applications in order to drive long-term sustainable growth. We look forward to combining with Stratasys to deliver profitability while driving further innovation for a larger customer base and providing expanded opportunities for our employees.”

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