Burlington-based 3-D printing company Desktop Metal is merging with larger peer Stratasys, as consolidation hits the sector after several years of disappointing results.
Stratasys, based in Minnesota and Israel, will pay 0.123 of its shares for each share of Desktop Metal. That equaled $1.75 per share after the market closed on Thursday and valued Desktop Metal at less than $600 million. Stratasys shareholders will control 59 percent of the combined company.
The price per share is less than Desktop Metal’s stock price a month ago of $2.17, but that was before the company posted disappointing first-quarter results. Since going public by merging with a special purpose acquisition company, or SPAC, in December 2020, Desktop Metal’s stock price has lost more than 90 percent.
“We think both companies are extremely undervalued,” Desktop Metal chief executive Ric Fulop said in an interview. “We’re not selling for cash … Both companies are taking equity in each other because we believe that.”
The companies said the merger would combine Stratasys’s mostly plastic-focused 3-D printing technology with Desktop Metal’s focus on other materials including metals, composites, and wood. Combined, the companies would have 27,000 customers ranging from Raytheon and Adidas to Toyota and Boston Scientific. Pro forma revenue for the combined companies would total $885 million this year, growing to $1.1 billion in 2025, the companies said.
The consolidation comes as the 3-D printing industry has grown more slowly than anticipated. For example, Desktop Metal, at the time of its SPAC deal, forecast 2023 revenue of $329 million. Analysts now expect only $218 million. And the company has yet to turn a profit, posting a loss of $740 million last year and $53 million in the first quarter.
Stratasys chief executive Yoav Zief will remain as the head of the combined company after the deal closes, which is expected by the end of the year. Fulop will remain as chair.
The combined companies expect to cut expenses by $50 million, which follows layoffs of 15 percent of Desktop Metal’s workforce in February. But the future cuts are not expected to focus on Boston-area workers, Fulop said. About 250 out of Desktop Metal’s 1,000 employees are in Massachusetts.
“We are fully committed to growing our position in Boston and have a really strong R&D and technology team in Boston,” he said. “There’s a lot of talent in our area.”
Desktop Metal was founded in 2015 by Fulop and a group of MIT professors, including Ely Sachs, who invented the method known as binder jet printing, which sprays liquid onto layers of powder to form products.