Industrial 3D printer maker Essentium has disclosed plans to go public through a merger with the Special Purpose Acquisition Company (SPAC) Atlantic Coastal Acquisition.
Due to close by the end of the first quarter of 2022, the deal will see the companies come together in a joint venture worth an estimated $974 million, which will trade on Nasdaq under the symbol “ADTV”. The transaction is expected to net the resulting company $346 million, but the companies have already poured cold water on the expense speculation, saying “proceeds should primarily fund organic growth.”
“We believe that following this transaction, Essentium will be extremely well positioned for rapid growth as it further expands its ecosystem offerings, capitalizes on its focused sales pipeline and executes its mergers and acquisitions strategy. acquisitions while continuing to advance AM as a public company,” said Tony Eisenberg, CSO of Atlantic Coastal Acquisition of the deal.
High speed extrusion technology
Essentium may have been around since 2013, but it only launched its flagship High Speed Extrusion (HSE) technology in 2018. Designed to address the speed and strength drawbacks of traditional FFF systems, the company claims that its HSE printers are up to 15 times faster, while their built-in cameras are also said to provide faster data streams, allowing users to monitor releases with great precision.
Over the past three years, Essentium has steadily evolved its platform, first working with BASF and Materialize to introduce a high-speed open 3D printing model, then seeking to better support it with a new PEEK line and nylon that she co-created with LEHVOSS. , as well as a new batch of high performance filaments with aerospace, electronics and defense potential.
On the machinery front, the company has also expanded its offering recently, adding the HSE 240T to its existing HSE 180 and HSE 280i HT series portfolio at Formnext 2021. Marketed as a “compact powerhouse,” the new system is designed to be small enough to fit into an SME factory, yet efficient enough to provide cost and time advantages for those transitioning from traditional manufacturing.
Additionally, like many other 3D printing technologies, Essentium cites HSE’s potential to help manufacturers outsource production as one of its key benefits, and following its SPAC merger, the company’s CEO , Blake Teipel, said he is now ready to raise the funding needed to really scale the “distributed generation capabilities” of the platform.
“The fundamental deficits of our existing global supply chain models are exacerbated by escalating obstacles such as trade imbalances and the global pandemic,” Teipel said. “Today’s announcement represents a major milestone in our efforts to provide long-term sustainable solutions for a new manufacturing paradigm capable of meeting these global challenges head-on.
An upcoming $974 million IPO
Atlantic Coastal’s proposed merger with Essentium allows it to value the soon-to-be-formed company at $10.00 per share, assuming there are no buyouts by its shareholders. Given that Essentium expects to generate $212 million by 2023, the deal could be lucrative for its shareholders, as the combined company is expected to be worth 4.6 times that amount.
Once the transaction is complete, shareholders of both companies will inject their capital into the resulting company, with Essentium backers retaining 64% of the shares and Atlantic Coastal backers to inherit 36%. For shareholders of the latter who wish to use their redemption rights on the transaction, the company and ACM ARRT VII C LLC, a subsidiary of Atalaya, have agreed to conduct a joint tender offer for these shares.
Subject to limitations, this agreement will see Atalaya purchase the first 10 million shares tendered by shareholders exercising these repurchase rights, while Atlantic Coastal has agreed to purchase the remainder. Should the agreement be terminated within the next two years, Atlantic Coastal has agreed to also purchase the acquired shares of Atalaya at the repurchase price, adding stability to the transaction.
In terms of financing, the merger is expected to bring up to $346 million in net proceeds to the combined company, assuming there are no buyouts or closing expenses. Although Atlantic Coastal has a balance sheet of $346 million, some of that capital will also be raised through a $40 million PIPE, backed by Atalaya, BASF, Apeiron and investor Christian Angermayer.
Going forward, the merger may still be subject to shareholder approval, but the boards of both companies approved the deal unanimously, and according to Atlantic Coastal CEO Shahraab Ahmad, the The sustainability benefits of Essentium’s HSE technology should make it an ideal partner in achieving its green goals moving forward.
“We launched Atlantic Coastal with an ESG-centric focus and a mandate to partner with a company that will transform the nature of international business,” Ahmad added. “We believe Essentium is exactly that partner. Blake and his experienced team have developed a deep technology moat that is generating significant recurring revenue, supporting gross margin expansion and a very attractive unit economy.
AM’s SPAC IPO trend resurfaces
Over the past 18 months, a series of 3D printing companies have opted to go public through SPAC mergers instead of traditional IPOs, raising a huge amount of capital in the process. Prior to the big reveal of partial-service provider Essentium, Fast Radius was the newest of them, having unveiled plans to go public via a $995 million SPAC merger in July 2021.
On the other hand, companies like Xometry have also decided to go public recently, but chose to do so through conventional IPOs rather than SPAC deals. Despite not having the backing of PSPC, the company was still able to raise $302 million from the transaction, nearly $50 million more than it had originally anticipated.
3D printer maker Formlabs, on the other hand, said it was avoiding the temptation to take advantage of the industry’s SPAC IPO trend, after raising $150 million in May 2021. The CEO of the company, Max Lobovsky, reportedly said at the time that it was “big enough and mature enough” to go public, but that he would “take his time” and make sure he was ready to excel before to take such a step.
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Featured image shows an engineer using Essentium’s HSE 180-S 3D printer. Photo via Essentium.