A day after shareholder resistance derailed an acquisition in that market, GE (IW 500/6) on Ot. 27 said it would buy a 75% stake in closely held Concept Laser GmbH for $599 million.
At the same time, GE bumped up the offer for Swedish 3-D printing company Arcam AB to 300 kronor a share from 285 kronor.
The moves will fortify GE’s strategic bet on the so-called additive manufacturing market after the company on Oct. 26 abandoned a deal for SLM Solutions Group AG amid objection from shareholders of the German company, including billionaire investor Paul Singer.
“The speed with which GE was able to switch out SLM with a bid for Concept Laser is reflective of the asset-rich environment for 3-D printing players, as well as the company’s aspirations to build out its presence in this fast-growing new technology space,” Deane Dray, an analyst at RBC Capital Markets, said in a note. “These are not make-or-break investments for GE by any measure, but are complementary build-outs to its digital industrial transformation.”
GE is seeking to expand use of additive manufacturing as it focuses on building industrial equipment with digital capabilities. The Boston-based company, which already uses the machines to print fuel nozzles for jet engines, has said acquisitions can help it build a $1 billion 3-D printing business by 2020.
The deal for Concept Laser will allow GE to take full ownership in several years, GE said.
Concept Laser, which has more than 200 employees and is based in Lichtenfels, Germany, specializes in technology that uses lasers to fuse metal powder into parts. The company, founded in 2000, serves customers in the aerospace, medical and automotive industries. GE said it planned to keep Frank Herzog as chief executive officer.
“Concept Laser is a direct competitor to SLM in powder-bed laser additive manufacturing machines for metals processing,” Dray said. And since Concept Laser is closely held, a deal won’t run into activist-investor resistance, he said.
GE last month announced a plan to acquire SLM and Arcam for a combined $1.4 billion to help build a robust 3-D business. The SLM purchase ran into trouble after Singer’s Elliott Management Corp., a hedge fund that has been acquiring shares in both printing companies, said last week it would reject the bid because it wasn’t in the best interests of SLM shareholders.
On Oct. 27, GE said the conditions for the SLM deal weren’t met and it didn’t plan to renegotiate terms. GE had needed approval from investors holding at least 75% of SLM’s shares. Elliott has said it owns more than 20% of the company.
GE said last week that it would extend the acceptance period for its offer for Arcam to Nov. 1 from Oct. 14. Elliott, which has a track record of investing in European acquisition targets and holding out for a better price, is the second-largest shareholder in Arcam, with about 10% of outstanding shares, according to data compiled by Bloomberg.
In addition to boosting the price for Arcam, GE also said on Oct. 27 that it would reduce the minimum acceptance threshold to 75% from 90%.
By Richard Clough and Oliver Sachgau