Stay with me now: Ratos AB of Sweden announced that its Danish subsidiary, Contex Group, signed an agreement to sell its subsidiaries Z Corporation and Vidar Systems to 3D Systems Corporation for about $137 million. Contex will use the cash to pay down bank debt and pay a “dividend of the excess amount (USD 50-70m)” to its owners. Nice to be an owner.
Abe Reichental, President and CEO of 3D Systems said, "We believe that the strong strategic fit between our businesses, combined with expanded capabilities in product development, channel coverage, manufacturing and marketing, could present [sizable] cost and revenue synergies that together offer significant long-term customer benefits and shareholder value.” In Z Corp’s press release, Mr. Reichental further highlight the strategic importance of the acquisition: “This is a strategic fit for both businesses that will expand our capabilities in product development, channel coverage, manufacturing and marketing. We share Z Corporation’s commitment to its customers and partners, and look forward to building the 3D content-to-print platform of the future.”
Finally, Z Corporation CEO John Kawola said, “Our vision is to help designers create more ideas, more communication, and more innovation; and joining 3D Systems enables to us deliver on that promise even faster. We intend to make multi-color 3D printing accessible to far more designers, provide a more complete customer experience, rapidly advance new applications, and build the foundation for a new generation of Z Corporation innovations.”
In an open letter to customers and partners, Mr. Kawola wrote that “Z Corporation and 3D Systems will deliver the most comprehensive suite of 3D printing solutions available in the industry, together with a single, strong source for service and support. The business model is ideally suited to small businesses that need solutions to grow with them; and to enterprises needing a complex mix of products, services, and 3D content.” Customers should see more frequent product releases and upgrades, and the ability to “mix Z Corporation solutions with product offerings from 3D Systems.”
The acquisitions are subject to customary closing conditions, including regulatory approvals. Closing is expected by the end of 2011 or in early 2012.
It’s a lousy day for world markets, so it’s hard to be certain, but 3D Systems’ shares are down 7% while the rest of the US market is down about 2% — I’d have to conclude that investors are not happy with the deal. I can see the strategic rationale but have to wonder: sooner or later 3D Systems is going to have to slow down and digest what it’s got or those synergies simply won’t materialize. Is it time for a breather?
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