3D Printing company Stratasys Ltd. announced today it signed an agreement to acquire start-up Origin Inc. According to a release, the merger (expected to close in January 2021) is an opportunity for Stratasys to expand its leadership through innovation in the fast-growing mass production parts segment with a next-generation photopolymer platform in industries such as dental, medical, tooling, and select industrial, defense, and consumer goods segments.
Ultimately, Stratasys expects Origin’s proprietary programmable photopolymerization (P3) technology to be an important growth engine for the company. "This is an important step in advancing our strategy to lead in polymer 3d printing by expanding into mass produced production -- the fastest growing segment of 3d printing industry. We believe that combining Origin's innovative technology with our industry best global footprint will help drive our leadership position in polymer additive manufacturing,” says Stratasys CEO Yoav Zeif in a conference call discussing the agreement. “Adding up to $200 million incremental annual revenues for Stratasys within the next five years. Most of these revenue will be generated from manufacturing applications, including a new spot and industry segment that we estimate with $25 billion by 2025.”
Origin’s P3 technology, an advancement on digital light processing (DLP) principles, cures liquid photopolymer resin with light. The company’s first manufacturing-grade 3D printer, Origin One, precisely controls light, heat, and force, among other parameters, via Origin's closed-loop feedback software. This new technology enables customers to build parts with industry-leading accuracy, consistency, size and detail, while using a wide range of commercial-grade, durable resins.
Origin works with a network of material partners such as Henkel, BASF and DSM to develop resins for its system. “We partnered and developed materials with Origin before Origin One was launched because we believed in their technology and vision for the future of photopolymers in additive manufacturing” said François Minec, Managing Director at BASF 3D Printing Solutions GmbH. “Now, as part of Stratasys, we’re confident that together we can take on the broader manufacturing ecosystem.”
Origin One systems have been successfully deployed across a variety of industries, including shoe manufacturer ECCO. “We’re pleased to continue our cooperation with the Origin team as an exclusive partner within the area of the footwear industry categorized as Direct Injection Production, now also by leveraging Stratasys’ global infrastructure,” said Jakob Møller Hansen, Vice President Research & Development, ECCO.
“We founded Origin to create a whole new additive manufacturing platform that enables mass production of end-use parts with incredible accuracy, consistency, and throughput along with a wide range of available materials,” said Origin CEO and co-founder Christopher Prucha. “Stratasys is the best company for us to join to achieve our vision, giving us an unparalleled opportunity to significantly expand market reach and enable us to bring our P3 technology to a larger audience.”
During the conference call, Prucha explained that Origin began working with Stratasys before the pandemic. “We believe Stratasys has the best service and go to market platform. We see this combination as allowing us to achieve our vision and get the install base globally,” he says. “We did not have to choose to merge with Stratasys on a survival.”
Under the terms of the agreement, the total consideration for the transaction is comprised of $60 million paid on closing ($6 million of which is subject to the founders' retention over 3 years) and $40 million that is subject to performance-based earnouts over 3 years. The acquisition will be paid using a combination of stock of approximately $45 million and cash of approximately $55 million at closing and throughout the earnout period. Approximately $32 million of the cash expenditure will be at closing. The acquisition is expected to accelerate Stratasys’ growth rate and be slightly dilutive to non-GAAP earnings per share in 2021, and accretive to Stratasys' non-GAAP earnings per share by 2023. The Origin team will join Stratasys and lead the development of its technology and product platform, with a full global launch via the Stratasys go-to-market organization towards mid-2021.
“Our customers are looking for additive manufacturing solutions that enable use of industrial-grade resins for mass production parts with process and quality control,” said Stratasys CEO Yoav Zeif in a release. “We believe Origin’s software-driven Origin One system is the best in the industry by combining high throughput with incredible accuracy. When combined with Origin’s extensive materials ecosystem and our industry-leading go-to-market capabilities, we believe we will be able to capture a wide range of in-demand production applications on a global scale. Together with our intended entry into powder bed fusion technology, the acquisition of Origin reflects another step in fulfilling our objective to lead in polymer additive manufacturing by offering comprehensive, best-in-class technologies and solutions to create a fully digital additive value chain, designed for Industry 4.0 integration.”
