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3D Printing Unicorn Desktop Metal To Go Public In Latest Deal With A Blank Check Company

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3D printing unicorn Desktop Metal is the latest company to go public in a deal with a blank check company.

It will list on the New York Stock Exchange in a merger with Trine Acquisition Corp., a special purpose acquisition company led by former cable exec Leo Hindery Jr. and HPS Investment Partners. Expected valuation: up to $2.5 billion.

The public listing and a total of $575 million in new funds from the transaction will give Desktop Metal the firepower to expand aggressively, cofounder and CEO Ric Fulop said in an interview with Forbes. ”We have a plan to grow to over $1 billion in revenue over five years,” he says.

With revenue of some $26 million last year and expectations for similar this year, that represents an extremely aggressive growth rate that far outpaces the 3D printing industry’s overall 25% compounded annual growth. The new cash will give Fulop the ability to both develop new products internally and to acquire smaller players as the industry begins to consolidate. “We will be the best capitalized company in the space,” he says. “And this will allow us to . . . build a formidable position in our market.”

Burlington, Mass.-based Desktop Metal, a leader in metal 3D printing, has raised more than $430 million from investors that include Koch Disruptive Technologies, GV, Ford, NEA and Kleiner Perkins, at a valuation of some $1.5 billion at its latest funding round in January 2019. Under terms of the deal, Desktop Metal’s existing shareholders are expected to hold approximately 74% of the company’s shares, which will trade under the ticker ‘DM.’ The transaction includes $575 million in funds from Trine and from investors that include Miller Value Partners, legendary investor Bill Miller’s firm; Chamath Palihapitiya, founder of Social Capital; and JB Straubel, the first chief technical officer of Tesla. The deal is expected to close in the fourth quarter.

The move represents the latest in a flurry of deals by SPACs, those once-obscure blank check companies that have made a resurgence this year. At least 79 companies have gone public so far this year by SPAC, compared with 59 for all of 2019, according to SPACInsider. Desktop Metal had been gearing up for a traditional initial public offering, but changed course in choosing to do a SPAC deal to access the public markets. Compared to an IPO, a SPAC listing is faster and easier for the selling company—especially in the era of Zoom road shows. “We switched tracks,” Fulop says. “About one-third of all IPOs have been through this process. I think the pandemic has driven that.”

Earlier this week, Luminar, a fast-growing maker of laser lidar sensors for automotive, announced its own intentions to list on Nasdaq through a SPAC deal. Other companies that have recently reached agreement to list via SPAC include upstart electric car maker Fisker and health-services company MultiPlan. “SPACs have really changed from the old days,” says Hindery, who will join Desktop Metal’s board of directors with the deal. “IPOs take longer, and they are not as fruitful in bringing in targeted investors.”

Fulop, 45 and a native of Venezuela, is a serial entrepreneur known before Desktop Metal for A123 Systems, a one-time high-flying battery maker that filed for Chapter 11 bankruptcy protection in 2012 and ultimately emerged under Chinese ownership (after Fulop was gone). He launched Desktop Metal in 2015 with six cofounders, including MIT professors Yet-Ming Chiang, who had been his cofounder on A123, and Ely Sachs, the elder statesman of 3D printing who coined the phrase “3-dimensional printing” in his first patent and was the lead inventor of the binder-jet 3D printing technology.

His timing was smart. While the earlier boom in 3D printing focused on consumer printers that could spew out trinkets, today’s focus is industrial uses like automotive and aerospace where designs that could only be produced on such printers create more efficient parts with less weight. Such production scale has been the holy grail of 3D printing, which first made inroads in prototyping and for high-end, regulated industries, such as aerospace and medical devices. Desktop Metal’s customers today include Ford, BMW, Lockheed Martin and Georgia-Pacific.

Fulop, a longtime proselytizer of additive manufacturing, bet five years ago that the way manufacturers make things was about to change as mass production with giant 3D printers, such as Desktop Metal’s, could begin to replace CNC machining and casting for numerous metal parts. Other companies, including HP, have also developed metal 3D printers for mass production. “Before it was more expensive, so it was very difficult to get products made cost-effectively and it only made sense for prototyping,” he says. “We actually have the ability to do it at scale, and to do it in a really high throughput way.”

Fulop cites statistics from 3D printing analyst Wohlers Associates that the additive manufacturing industry reached $12 billion in 2019 and, with growth accelerating from 20% a year to 25% annually, should reach $146 billion by 2030. That’s still a small piece of the $13 trillion global manufacturing market, but it represents an ever-increasing piece of the pie. “We’re lucky,” he says, “that we’ve been building something that has the eye of the market.”

Trine evaluated more than 100 potential acquisition targets before reaching the agreement with Desktop Metal. Hindery, now 72, says that when he was connected with Fulop through Credit Suisse, he saw similarities to cable in its heyday. “Because of my background, we were committed to finding somebody much like in the old cable days that had a lot of top-line growth and a technology edge,” he says. “In the broadband category I like to think we were out on the cutting edge. . . . [Now] there’s no opportunity in cable. Entrepreneurial engagement in media right now is hard, and it’s especially hard in distribution assets.”

By contrast, 3D printing—or additive manufacturing, as those in the industry prefer to call it—is on the cutting edge technologically. As an example of what 3D printing at mass scale can do, Hindery points to the I/O port on an iPhone, which he says generally costs about 50 cents to make with traditional manufacturing techniques. With metal printers, that cost of production can drop to just 2 cents a piece, he says, while the number of pieces churned out each day rises astronomically. “I don’t even use the phrase ‘3D printing’ anymore except anecdotally,” Hindery says.

Trine was incorporated as a blank check company in Delaware in September 2018, and it went public in March 2019. Its shares closed at $10.14 on Tuesday, valuing the entity at $380 million.

For more on Desktop Metal, see our 2018 feature story, “The Next Industrial Revolution: How A Tech Unicorn’s 3D Metal Printers Could Remake Manufacturing.”

For more on the promise of 3D printing during Covid-19, see our video “How 3D Printing Is Accelerating The Coronavirus Test Race.”

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