There has been a series of additional developments in the Nexa3D situation.
Nexa3D is a California-based 3D printer manufacturer that markets a series of resin, SLS, and FFF 3D printers, along with post-processing and injection molding capabilities. Many of their products were obtained through corporate acquisitions, including Essentium and AddiFab.
The company continued its expansion with deals to acquire Desktop Metal and Markforged, both of which themselves have made significant acquisitions of other players in the industry. However, those deals have not yet closed.
Then it was Formnext 2024 in Frankfurt, where Nexa3D was to exhibit in one of the larger spaces booked for the world’s largest trade show on 3D printing.
They didn’t show up.
Rumours swept the event, with some suggesting that the company was bankrupt. There were sightings of the company’s CEO. But there were no announcements. The company’s website produced no official notifications of anything amiss.
After the event, we were contacted by Nexa3D representatives and were told that the company was merely busy with other projects and things were OK. I asked to discuss this further, as it all seemed a bit suspicious, but never heard back.
Meanwhile, the investment market was observing the situation and considered the fate of the two outstanding acquisitions, Desktop Metal and Markforged. If Nexa3D were in some kind of trouble, there was a risk that these deals would not go through. The result was that the valuations of these companies fell lower than their proposed acquisition price due to the uncertainty.
Then late last week, Nexa3D did release an announcement, entitled “Nexa3D Announces Strategic Decision to Scale Back Operations”.
In the announcement, they say:
“The decision comes after thorough exploration of strategic alternatives amidst evolving market dynamics and macroeconomic pressures.”
And:
“The company is committed to ensuring a responsible process that prioritizes the well-being of its employees, fulfills obligations to customers, and seeks opportunities to transition its technology and intellectual property to organizations that can continue to build on Nexa3D’s legacy.”
This sounds like they have had financial troubles and have been unable to raise revenues or funding. The second quote suggests they are at the point where they need to sell off assets to recover funds. The acquisitions they previously made will possibly end up elsewhere.
But hold on, there are those two outstanding acquisitions-in-progress to deal with, Markforged and Desktop Metal.
Desktop Metal really, really wants the deal to go through. So much so that they launched a lawsuit against Nexa3D for “breach of the merger agreement”. They allege that Nexa3D has not used their best efforts to obtain regulatory approval for the merger, as per their contract.
They write:
“Desktop Metal seeks specific performance, including, but not limited to, requiring Nano Dimension to cooperate in seeking approval by the Committee on Foreign Investment in the United States (“CFIUS”), including finalizing negotiations and executing the mitigation agreement proposed by CFIUS (as required by the Merger Agreement), and to close the merger within five business days of receiving CFIUS’ approval.”
The CFIUS is the agency that reviews the implications of foreign investment on the security of the United States. I’m not quite sure why they are involved, as both Desktop Metal and Nexa3D are US-based entities. However, there may be investors in either that are non-US-based, which may be of interest to CFIUS.
In any case, it appears that this is the regulatory delay, and if Nexa3D is indeed scaling back, it is very hard to see how they could complete the acquisition of Desktop Metal even if regulatory approval were obtained. It may be that Desktop Metal missed their train by only minutes.
Accordingly, the market this week seems to be dropping the valuation of Desktop Metal even further. We’ve been tracking 3D print company valuations in our weekly leaderboard, and the trend for Desktop Metal has been downward, like most other companies being tracked. However, the downward trend stopped upon the announcement of the merger. Now it seems to be continuing.
Meanwhile, there’s still the Markforged deal. As of this writing, there has been no official announcement from Markforged on these developments. However, it’s highly likely there are some intense discussions behind the scenes.
What’s at stake here? It’s more than just Nexa3D. Because of the absorption of many different companies by these three companies, there are dozens of 3D print technologies at risk. Nexa3D is attempting to sell off their assets, but which other company will buy them? If Nexa3D wasn’t able to make them work commercially, how could anyone else? What happens when all of these technologies are up for sale? Are there enough buyers to pick them all up?
That’s probably not happening, simply because money is very tight in the 3D print world these days due to the spectacular devaluations of several high-profile companies. Investors poured in billions of investment in hopes of massive growth, but it didn’t happen because the technologies were not appropriate for manufacturing scale. Investors lost and don’t want to do so again in our industry.
The next few weeks will be interesting.
