Two leading rapid prototyping machine suppliers will become one when 3D Systems Corp. merges with DTM Corp. to create a company with $150 million in sales.
3D Systems of Valencia, Calif., earned profit of $8.1 million on 2000 sales of $109.7 million. Austin, Texas-based DTM reported $40 million in sales and $3.3 million in profit for the year.
"I don't think many people saw this coming," said Terry Wohlers, a consultant who follows rapid prototyping at Wohlers Associates Inc. in Fort Collins, Colo. He said the deal will strengthen both companies.
3D Systems sold the first rapid prototyping machine in 1987, Wohlers said. "Certainly consolidation was inevitable to some degree," he said.
Both Nasdaq-traded companies announced the deal April 3, after their respective boards gave unanimous approval.
Equipment from 3D Systems and DTM quickly turns out models that can be used to help design a part. DTM recently developed a process to make injection molds. Both companies are working on technologies for "direct manufacturing" — using their machines to make finished production parts from plastics and other materials, without the need for a mold.
The news, announced in the morning, sparked heavy trading volume for both stocks — but DTM's price went up while 3D Systems' fell a little.
3D Systems will pay about $45 million to buy all outstanding shares of DTM, or about $5.80 per share. On April 2, DTM's stock closed at $3.86, but after the announcement, it shot up on heavy volume to close April 3 at $5.06.
The companies said DTM will maintain its facility in Austin after the deal. John S. Murchison III, DTM president and chief executive officer, is expected to join the 3D Systems board.
"We believe our merger with DTM will enable us to continue our growth into the rapidly developing market for mass customization, rapid tooling and direct or indirect in-line manufacturing processes, which requires new materials such as metal, plastic, composites and ceramics," said Brian K. Service, president and CEO of 3D Systems.
Wohlers said DTM will give 3D Systems some important technologies for direct manufacturing. For example, DTM machines are making customized nylon parts for the space shuttle, with no need for a mold.
"[DTM] is doing some incredible stuff with glass-filled nylon," he said.
3D Systems must secure additional financing to finish the deal.