The end of October proved to be somewhat tumultuous for a few players in the 3D printing industry. The cat was originally set among the pigeons back in September when GE’s aviation division announced that it was looking to scoop up two of the biggest metal additive manufacturing (AM) platform OEMs in a combined deal stated to be worth $1.4 billion. There are three major themes in this story — the technology, the application(s) and, of course, the money.
On the technology front, GE was looking to acquire the two most dominant processes for direct metal AM — laser melting and electron beam melting. The former GE sought to bring in-house through the acquisition of German SLM Solutions, the latter by acquiring Swedish company Arcam.
Even back when the announcement of intent to buy was made public, there was some skepticism that 75% buy-in from shareholders — the level required to seal the deal — would be difficult to achieve. And so it has proved for SLM, as the third largest shareholder in that company, Elliot Management, which holds 20% of shares, has now scuppered the deal. The same investment group has a 10% holding in Arcam too, it turns out, which may influence that deal, but less likely.
I’m not particularly business minded, I grant you, but for me the greed behind this decision by investors is breathtaking! Obviously, I understand that their job is to make money. That said, it seems the leadership at Elliot Management (a billionaire no less) wanted more than GE was prepared to offer, believing they were undervaluing SLM.
By the end of last week, it became clear that GE was not going to play ball, refused to up the offer and went and bought privately held Concept Laser instead for a mere $599 million — a similar value to the SLM offer. That was relatively easy to do, because there are numerous laser platforms commercially available, and to be frank, you’d wonder why they didn’t go for the privately held company in the first place?
With Arcam, there are no commercially viable alternatives, which would explain why in this case GE has extended the deadline for the deal. No indication of whether they will up the offer, but if they want EBM, they might have to at least consider it.
Even while part of me was cheering that the money theme in this story was not completely allowed to be ruled by greed, it was short lived. This is because regardless of what GE is saying about selling machines to external customers (including competitors), I still have numerous question marks over the conflict of interest that will invariably exist once the conglomerate brings the development and manufacture of these two processes in-house.
First, GE will be servicing and supplying itself — within the aviation division, but also across all of its other divisions too. That will always take priority, which is not ideal for clients.
Second, when new advances are made with the newly acquired AM ecosystems (hardware, software, materials) will these be offered to external clients or kept proprietary? Will they only sell the new advances as a service, along with application developments, effectively creating a monopoly?
It all seems a little bit murky, despite the PR spin. I still haven’t decided if I think GE’s acquisitions are a good or a bad thing, but not having a crystal ball at my disposal, I guess only time will tell.