A Wisconsin-based rapid manufacturing specialist with 3D printing, tooling and injection molding assets is going public in a $420 million deal that values the company at $1.5 billion.
New York-based Altimar Acquisition Corp. II and Hartland, Wis.-based Fathom Digital Manufacturing Corp. announced July 16 that they are merging and plan to take the new company public later this year.
The companies are highlighting their advanced manufacturing capabilities, including expertise in digital manufacturing.
"We believe Fathom is a growing, cash-generating, well-managed disruptor in the Industry 4.0 space that will deliver strong results," Altimar Chairman and CEO Tom Wasserman told investors in a July 16 call describing what he sees as "the next wave of the Industrial Revolution."
While most of the attention is on 3D printing, the merger is also a big deal in the tooling and injection molding sectors.
In February, Fathom acquired Summit Tooling Inc. and Summit Plastics Inc. of McHenry, Ill. In late 2019 it bought ICOMold LLC, a custom injection molder based in Holland, Ohio.
After the IPO, the company plans to make additional acquisitions, Wasserman said, as part of a strategy to gain business in the low- to mid-volume manufacturing market.
Altimar, a special-purpose acquisition company (SPAC), eyed numerous partners but Fathom stood out with 35 years of experience in on-demand digital manufacturing, 3D manufacturing and advanced traditional manufacturing like machining, sheet metal fabrication and injection molding, Wasserman said.
Fathom has more than 90 large-platform additive manufacturing machines and offers eight different 3D printing services as well as about 20 other manufacturing processes at 12 facilities with nearly 450,000 square feet of production capacity.
The company serves 3,000 mostly blue-chip clients in a range of industries, including aerospace, automotive, electrical vehicles, consumer, industrial, medical and technology.
Recent industry advances in software, hardware and machinery have created a $25 billion market for low- and mid-volume manufacturing that the merged companies will pursue, Wasserman said.
Altimar will fund the transaction with a combination of $345 million cash and $80 million of committed common stock offered through private investment in public equity (PIPE) at $10 per share.
The deal is expected to accelerate growth for Fathom, which generated $149 million in 2020 sales and is projected to reach $200 million in 2022, according to Fathom CEO Ryan Martin.
"We've made 13 acquisitions in the last three years and have a strong track record of integrating and compounding the growth of the businesses we acquire," Martin said on the call. "We see a target-rich environment to expand the Fathom platform and we will be able to better execute on our pipeline once we're able to utilize our stock and acquisition currency with the current line of sight into dozens of potential opportunities."
Fathom is ready for the public market, Martin added.
"As an early adopter of additive and advanced traditional manufacturing, we know our capabilities fill a clear market gap for outsourced digital manufacturing solutions tailored to the complex needs of corporate customers," he said.
Fathom picks up a lot of business through product development projects, which Martin calls "a hallmark of Industry 4.0."
"We provide our clients access to this technology, helping them iterate more efficiently in their development pipelines, get products to market faster and allow them to gain a differentiated advantage over their competition," Martin said.
Fathom offers three tooling options: rapid tooling for up to 5,000 parts in one and a half to three weeks, prototypes tools for up to 50,000 parts in two to four weeks, and production tools for up to 1 million parts in five to 10 weeks.
For production, Fathom has 12 manufacturing centers to help its customers onshore operations from overseas to North America. Summit Tooling in McHenry has 15 injection molding presses ranging from 40-350 tons of clamping force. ICOMold offers molding in the U.S. and in China.
Fathom's agility helps customers overcome supply chain disruption and grow their U.S. workforce, Martin said.
"We believe this move towards bringing more high-quality manufacturing jobs back to North America will be both a tailwind for our business and a trend we can help foster and accelerate to the benefit of multiple stakeholders across the manufacturing ecosystem in our local communities," Martin said.
As more companies look to technologies like additive manufacturing to drive product innovation, Fathom stands to gain, according to the partners, who put the value of the low- to mid-volume manufacturing market at $25 billion.
"The existing options available to our corporate customers are not suited to keep pace with the new market reality," Martin said. "Corporate customers are forced to choose between investing in increasingly costly in-house capabilities or outsource to options lacking either the required scale or corporate market focus to deliver end-to-end solutions. We provide a one-stop outsource solution for corporate clients and the breadth and scalability of our offering took decades to build and is nearly impossible to replicate."
