Stratasys, Ltd. (NASDAQ:SSYS) is reported to be in takeover talks with Brooklyn-based 3-D printing company Makerbot. If Stratasys does purchase the company, it would be one more acquisition in a long line for 3-D titans.
Both Stratasys, Ltd. (NASDAQ:SSYS) and 3D Systems Corporation (NYSE:DDD) have continued to make purchases over the last several years. This is a sign of confidence in the sector, even though many analysts have had their doubts about the valuation of these top 3-D printing firms.
The rumored Makerbot purchase
Does acquiring Makerbot make sense for Stratasys, Ltd. (NASDAQ:SSYS)? If the deal is in the works, it would likely mean Stratasys is making a move into the consumer market, something it hasn’t previously attempted. The company’s lowest-priced printer is $9,900, while competitor 3D Systems Corporation (NYSE:DDD) sells its Cube for about $1,300 at Staples, Inc. (NASDAQ:SPLS), making it affordable for many individuals. But because Makerbot focuses on the average user, and generated about $50 million in the last year from that niche, a purchase by Stratasys would mean the company is ready to compete head-on with 3D Systems for the consumer market.
Mergers and acquisitions
Stratasys, Ltd. (NASDAQ:SSYS) merged with Objet in April 2012, but will have to increase the number of acquisitions it makes in order to compete with 3D Systems Corporation (NYSE:DDD), which since 2007 appears to be on a mission to buy out any 3-D-related company it sees. The firm started its buying frenzy after an acquisition program that was initiated in 2007. It intended to collect the best designers, engineers, materials, software, printers and printable content it could in order to lead the future of this disruptive technology. 3D Systems Corporation (NYSE:DDD) bought 16 companies in 2011 alone, right before its share price began to surge. The purchases essentially put the industry under one roof, with the exception of Stratasys, Ltd. (NASDAQ:SSYS), though that company is on course to become a niche provider of 3-D technology to large companies.
The desires of a shopaholic
3D Systems Corporation (NYSE:DDD) could even buy the third-largest publicly traded 3-D printing company, ExOne Co (NASDAQ:XONE). The firm, which just released its IPO in February, mainly caters to automakers, aerospace and heavy-equipment industries. The company is certainly confident, which could be cause for concern of 3D Systems and could prompt a buyout. In April, ExOne Co (NASDAQ:XONE)’s CEO Kent Rockwell said he is targeting a whopping 50% gross margin in the next three years. This is part of the firm’s attempt to increase revenue to $100 million per year. Three new production service centers are slated to be opened by 2014. And the firm doesn’t seem concerned with the acquisitions being made by the big players 3D Systems and Stratasys, as it looks to open operations throughout the world, including in Japan and South America. Like Stratasys, ExOne is focused away from the consumer market, opening up a wide pasture in which 3D Systems can gallop.