Nano Dimension’s Acquisition of Markforged and Desktop Metal Accelerates Additive Manufacturing Industry Consolidation

On September 25, Nano Dimension announced its intent to acquire Markforged for US$115 million, less than 90 days after the same announcement was made for Desktop Metal (US$135 million to US$183 million). Together, the combined entity brings together some of the most promising Additive Manufacturing (AM) technologies developed for scale—notably, Digital Light Processing (DLP) and Metal Binder Jetting (MBJ)—and underscores a major industry consolidation that has accelerated in the last 12 months. The Desktop Metal deal, which was an essential move to avoid a terminal case of insolvency, is expected to close in 4Q 2024 and Markforged in 1Q 2025. From here, it will be about a 2-year road to profitability as the newly structured Nano unifies Research and Development (R&D), software, and Go-to-Market (GTM) efforts.

There are both benefits and concerns regarding the impact of Nano’s actions in the last 3 months on overall market development.

On the positive side, unifying technology from historically competitive providers will create economies of scale and accelerate R&D, especially as respective teams learn what’s under the hood. The deals also give a much-needed breath of fresh air to an otherwise dire outlook for production-grade MBJ and should help minimize the mild chaos that these three companies have created suing each other for Intellectual Property (IP) infringement. Plus, Desktop Metal had been looking for an eligible suitor for two-and-a-half years and was just about out of runway due to a lack of printer sales. The other benefit is to existing customers, which presumably have more AM tools at their disposal through a single point of contact. Stratasys’ shareholders should also have some respite from Nano’s incessant takeover attempts in the last few years; while Nano will likely make a handful of smaller acquisitions in the near-to-medium term, it will largely be focused on the big task of integrating its latest purchases and will interact with Stratasys in different ways. After all, Nano just grew from a company that generates US$52 million per year in revenue to US$340 million with the new combination, all in about 3 months.

Concerns include the management of disparate technologies; what will get cut among the many acquisitions between the three companies; and the overall path to profitability. For industry, the risk is that MBJ and DLP have been greatly consolidated as a result of the latest developments and, although truer for MBJ, the result could be that development accelerates, but only after several years of integration/growing pains. Another risk is that Nano’s strategic focus on materials as a source of recurring revenue leads to more proprietary solutions that people don’t understand and need to be trained on how to deploy. This dynamic leads to a long payback period because it necessitates significant R&D, time, and alignment to drive through such programs. Proprietary processes also relegate AM to the same side hustle it’s always been a part of, rather than embedded in or alongside manufacturing production.

Nano’s track record for acquiring companies isn’t stellar, and Desktop Metal and Markforged aren’t much better. If anything, there was so much activity at one point it felt like whack-a-mole; as soon as one company made a move, another was soon to follow—acquisition, lawsuit, etc. Notable pickups include Desktop Metal nabbing ExOne (binder jetting, sand casting) and EnvisionTEC (DLP), Markforged picking up Digital Metal (MBJ), and the seven small companies Nano acquired between 2021 and 2023 for various capabilities, like robotics and printing for sub-assemblies.

Competitively, the newly structured Nano means that for MBJ, a customer is likely to choose between what is available through the current Desktop Metal or Markforged portfolio, Hewlett Packard (HP), or Colibrium Additive (formerly known as “GE Additive” prior to April 2024). On the DLP side, major competitors include but are not limited to Stratasys, 3D Systems, and Carbon. The difference is that incumbent providers that are not Nano have a major leg up because customers of Nano need to muddle through an incoherent software environment. By contrast, a Stratasys customer can use the company’s GrabCAD software to interact with any variety of machines.

Software is key to achieving the cost, quality, performance, repeatability, and ease of use that AM needs to scale. To this point, the three independent companies—Nano, Desktop Metal, and Markforged—are fragmented entities with very little technology integration across the stack. The are opportunities to unify all pre- and post-processing for platforms that use the same materials; all printers should interoperate with the same software; and specific technology learnings must cross pollinate, like the TripleACT capability in the ExOne MBJ machines, alongside Desktop Metal’s proprietary Single Pass Jetting (SPJ) technology, but in a single offering. Ultimately, users need to be able to work with a single point of contact for their needs over the years, with easy-to-deploy solutions that enable them to grow seamlessly. The Markforged Digital Forge solution for managing AM workflows for its 15,000-printer installed base could be just the solution “the new Nano” needs, perhaps with some of the simulation sintering capabilities offered by Desktop Metal, but time will tell. The most important thing at this juncture is survival; the Desktop Metal deal has been approved by shareholders and Markforged should achieve a vote by Nano’s annual meeting at the start of December. If both deals go through, it makes Nano a more formidable competitor to larger companies that have been doing AM longer, but success will be dependent upon a coherent software strategy to unify the portfolios, including their collective 23,000 printers in the field.