Will Stratasys’ New Deal Lead to Gains in the Printer Market?

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Stratasys Ltd. (NASDAQ:SSYS) acquired rival MakerBot Industries for $403 million in stock, in a move displaying Stratasys commitment to the growing consumer market for 3D printing. While Stratasys mainly focuses on high-end printers, the move seems to point towards a focus on consumer oriented printers — in this case specifically 3D printers.

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The move is not unprecedented on Stratasys’ part. In 2010, it entered into a partnership with Hewlitt-Packard (NYSE:HPQ) to make and distribute 3D printers together. However, the two companies parted ways in August 2012. Scott Crump, chief executive officer and chairman of Stratasys, said at the time, ”Stratasys has enjoyed a productive relationship with HP, and moving forward, we will continue working towards our goal of achieving broader 3D printer usage worldwide.”

Crump also explained that “As the market for 3D printing technology grows, Stratasysis focused on further developing our independent channel distribution initiatives to expand our distribution reach even further. Our recently-announced merger with Objet will help grow customer awareness of the many opportunities to deploy 3D printing and rapid prototyping techniques and will allow us to implement an even broader distribution channel with a more extensive geographic reach.”

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The new deal reached with MarkerBot seems to display this strategy. David Reis, chief executive of Stratasys, says ”Makerbot is the undisputed leader in desktop printing,” Reis said. “Joining forces with Makerbot will make it possible for Stratasys to offer a full range of products.” He went on to explain that 3D printers, specifically the future of affordable consumer 3D printers, ”has a lot of potential.”

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While the technology for 3D printers has existed for several decades in industrial sectors, 3D printers have only just started to penetrate the consumer market. In the future, 3D printers could be used for a variety of different services including printing human organs, chocolate bars, or even skyscraper parts. The 3D market is estimated to approach $10.8 billion by 2021, according to Wohlers Associates — last year the industry made $2.2 billion.

The deal is a likely a blow to HP, which has now missed out on an opportunity to dip into the 3D market presently. The new deal will allow MakerBot to keep its name, products, and management structure, operating as a subsidiary of Stratasys. MakerBot owners will receive 4.76 million shares of Stratasys.

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