In the current 3D industrial period, publicly traded 3D printing pioneer company Stratasys has agreed to buy 3D printing start up Origin in a $100 million cash and stock deal.
This deal will combine Stratasys operations in polymer 3D printing with Origin’s resin-based technology for mass production. Stratasys, which is struggling to gain profit, expects that the new deal with Origin and its proprietary Programmable PhotoPolymerrization technology known as P3 will add up to $200 million in incremental annual revenue in next five years.
The purchase price includes $60 million paid at closing and $40 million based on hitting performance hurdles over the next three years. The acquisition between Stratasys and Origin is expected to close by early 2021.
The Pioneer of 3D printing
Stratasys is the pioneers of 3D printing. Founded by Scott Crump, he invented the technology called Fused Deposition Modelling, in 1989. Crump, took the company public in 1994 and was the CEO until it got merged with Objet in 2012.
However, in the past few year, Stratasys, which has the cap of $971 million, saw a downslide of revenue. The downslide shoot up during COVID-19. By the end of September 2020, losses ballooned to $455 million with the revenue of just $241 million.
Stratasys also noted that cash from operations increased in the third quarter.
The current CEO, Yoav Zeif, who took over the position just before the pandemic, worked as a partner at McKinsey said, “We used this time of the pandemic to rebuild the foundation of our company. With the Objet-Stratasys merger, we were so advanced, but we were not focused.”
Focusing on new strategy for the company, he said, “We have a portfolio of patents where we can build 10 new platforms with the patents we have, but we were not agile enough to bring it to market. We have not grown because we were focused on doing so many things. Now we have a much focused strategy—polymers, production and manufacturing—and we do not do anything except this.
Chris Prucha, a former software engineer at Apple, on the other hand, founded origin. Origin released its first manufacturing-grade printer, known as Origin One is designed to control heat, light and force helping customers to build parts with variety of durable resins.
Origin is one of the 3D printing companies stepped up during pandemic for producing nasopharyngeal test swabs and protective face shields.
Prucha reveals, “We rejected the first offer. It wasn’t something we were considering at the time.” However, as the two company continued talking, he finally changed his mind and realized that this deal will help the company in terms of technology.
Growth of 3D Printing
In recent times, there has been a good growth of 3D printing usage in large manufacturers as they discovered using this technology they can efficiently design parts.
According to Stratasys, the manufacturing application for 3D printing will reach $25 billion by 2025. “We are laser-focused. You cannot be more focused than polymer manufacturing,” says Zeif.