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General Electric CEO Jeffrey Immelt

GE Snaps Up European 3-D Printing Companies for $1.4 Billion

Sept. 6, 2016
With the offers for the European companies, GE is buying into two competing technologies.

In a bold move to acquire technology that could transform factory production in the coming decades, General Electric Co. (IW 500/6) announced it will spend $1.4 billion buying two European makers of 3D printers to expand use for the manufacture of components like aircraft parts.

GE offered to buy Sweden’s Arcam AB for 5.86 billion kronor (US$680 million) and, in a separate transaction, acquire SLM Solutions Group AG of Germany, the Boston-based company said in a statement on Tuesday. The biggest maker of aircraft engines said its first jet engine parts, called fuel nozzle interiors, made with the technology were introduced into service in July, paving the way for wider use.

The global market for 3D printing, also known as additive manufacturing, is growing as companies like GE increasingly move toward commercial parts production from making prototypes. The aviation industry was one of the early adopters because it allows for more complex designs, helping to lower the weight of parts and cutting back on waste of expensive materials on factory floors. GE Aviation has said it expects to print more than 100,000 parts for its jet engines by 2020.

3-D Growing for Parts Production

Until now, companies “have typically bought one or two machines for research and development,” Rachel Gordon, analyst at IDTechEx, a research company that has written a report on 3D printing, said by telephone. Companies are now “starting to use them to actually produce parts, buying bigger numbers of machines.”

GE’s move could trigger a wave of acquisitions in the sector, she said.

3-D printers build an object by thinly layering materials such as plastic powder, metal or liquid resin, following instructions from a computer-drawn blueprint. They are used to make components including car parts and surgical implants.

With the offers for the European companies, GE is buying into two competing technologies. Arcam promotes its proprietary technology using electron beams as having a fast printing process and greater ability to use a wide range of printing materials, while laser-based systems like SLM’s are generally capable of making more detailed components. GE already became Arcam’s top customer last year, placing the largest order to date to help produce turbine blades for jet engines.

“We chose these two companies for a reason,” said David Joyce, chief executive of GE Aviation. “They each bring two different, complementary additive technology modalities. Over time, we plan to extend the line of additive manufacturing equipment and products.”

GE offered 285 kronor per Arcam share, about 53% more than Arcam’s closing price of 186 kronor on Monday. Arcam’s board backs the bid, according to a statement. Its shares surged to the offer price in Tuesday trading in Stockholm, giving it a market value of 5.88 billion kronor.

Arcam will be able to sell its products to other companies in the aerospace industry even after GE’s takeover, Chief Executive Officer Magnus Rene said in a phone interview Tuesday. The company also has plans to expand into sectors outside its focus of aerospace and medical implants.

“We feel that GE is a strong industrial owner, which makes us stronger than the rather fractionalized ownership we have today,” Rene said. “They can help us accelerate the industrialization of the technology.”

Famous Fuel Nozzles

SLM investors are set to receive 38 euros a share from GE, a 37 percent premium to Monday’s close, the Lubeck-based company said in its own statement, adding that its executive and supervisory boards back the offer. SLM was trading at 38.70 euros as of 12:43 p.m. in Frankfurt.

GE’s fuel nozzles made using 3D printing are the “most famous” example of use of the technology in the industry, but airplane-makers Airbus and Boeing are also working on the process, according to Gordon.

Airbus Group SE has said it’s just starting to incorporate 3D-designed parts on a test basis and plane content produced with such technologies will grow substantially over the coming years.

By Niclas Rolander and Andrea Rothman

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Licensed content from Bloomberg, copyright 2016.

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