3D Systems Corporation has signed a definitive agreement to acquire Z Corporation ("Z Corp") and Vidar Systems ("Vidar") for $137 million in cash from Contex Group, a subsidiary of Ratos AB, a listed private equity company located in Stockholm, Sweden.
The combination of Z Corp and Vidar products and services with 3D Systems' complementary portfolio uniquely positions 3D Systems for accelerated growth in the fast-growing 3D content-to-print space. The transaction fills 3D Systems' product performance and price gaps with complementary products and technology and doubles its reseller coverage globally. The Company stated that it expects the acquisition of Z Corp and Vidar to be immediately accretive to its cash generation and to its Non-GAAP earnings in the first full year following completion of this transaction.
"We believe that the perfect strategic fit between these businesses, combined with expanded capabilities in product development, channel coverage, manufacturing and marketing, could present sizeable revenue and cost synergies that together offer significant long-term customer benefits and shareholder value," commented Abe Reichental, President and CEO of 3D Systems.
Z Corp is a leading provider of personal and professional 3D printers, 3D scanners and proprietary print materials and services. Its 3D printers rapidly create monochrome and full color models, prototypes and functional parts for a wide variety of applications, including education, architecture, healthcare, industrial and consumer uses.
Vidar is a leading provider of medical film scanners that digitize film for radiology, oncology, mammography and dental applications. The acquired businesses generated $58 million of revenue for the twelve months ended June 30, 2011, with consolidated gross profit margins of 55%. 3D Systems expects to incur one-time professional M&A and restructuring expenses in the range of $2.7-3.2 million during the fourth quarter of 2011, related primarily to the completion of this transaction, but inclusive of all other acquisition activities and related restructuring costs that are primarily attributable to the Huntsman specialty materials acquisition.
"We believe that this is the right time for us to take this decisive step to unleash the combined growth and value creation potential that this opportunity presents for the benefit of our expanding customer base, employees and shareholders," continued Reichental.
"Over the past two years, we honed our acquisition integration performance and delivered significant growth and value from our twenty-two acquired businesses. Given the importance of this acquisition, we decided to temporarily suspend the majority of our ongoing acquisition activities and focus exclusively on delivering the full benefit of the available customer and shareholder value. We believe that during the first full year of operation, we could benefit from synergies in the range of $5-10 million, comprised of accelerated revenue growth from our combined sales channel and identified integration cost reductions," concluded Reichental.
This acquisition is subject to customary closing conditions, including the receipt of regulatory approvals and is expected to close shortly after all those conditions are met. The Company hopes this will occur by the end of 2011 or early 2012.
Strategic and Financial Benefits
-- Doubling reseller channel accelerates revenue growth from combined portfolio and presence
-- Profitable razor and blades business with accretive gross profit margins enhances Non-GAAP earnings power
-- Highly complementary portfolio closes price and performance gap and delivers greater customer value
-- Differentiated print engine technology brings speed and full color capabilities enhancing competition and customer experience
-- Expected to be accretive to cash and Non-GAAP earnings with identified synergies