Desktop Metal Going Public!

Desktop Metal Going Public!
An array of Shop Systems [Image: Desktop Metal]

It’s official today: Desktop Metal is going public!

Metal 3D printing is getting a boost with today’s major announcement. Very few additive manufacturing companies are currently public — think 3D Systems and Stratasys.

The business of going public is quite a to-do, so this will be a work-in-progress until the full transaction closes in Q4 of this year. “The full transaction” is itself something of a to-do, as to accomplish its vision of being a publicly listed company, Desktop Metal is entering into a “business combination” with Trine Acquisition Corp.

Desktop Metal x Trine Acquisition Corp.

Trine is led by Leo Hindery, Jr. — who will be joining the Desktop Metal Board of Directors — and by HPS Investment Partners.

“After evaluating more than 100 companies, we identified Desktop Metal as the most unique and compelling opportunity, a company that we believe is primed to be the leader in a rapidly growing industry thanks to their substantial technology moat, deep customer relationships across diverse end-markets, and impressive, recurring unit economics,” said Trine’s Chairman and CEO, Leo Hindery, Jr.

The company describes itself:

“Trine Acquisition Corp is a newly incorporated special purpose acquisition company formed as a Delaware corporation for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.”

The SEC paperwork has been filed effective today, and through all the legalese (if you read through, I sincerely hope you like the word “whereas” and a whole lot of clarifying quotation marks), we can pick out a few specific points. The Merger Agreement reads in part:

“On August 26, 2020, Trine Acquisition Corp., a Delaware corporation (“Trine”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among Trine, Sparrow Merger Sub, Inc., a wholly owned subsidiary of Trine (“Merger Sub”), and Desktop Metal, Inc. (“Desktop Metal”).

Pursuant to the terms of the Merger Agreement, a business combination between Trine and Desktop Metal will be effected through the merger of Merger Sub with and into Desktop Metal, with Desktop Metal surviving the merger as a wholly owned subsidiary of Trine (the “Merger”).”

The Boston Business Journal describes the work the two companies will be doing toward effecting this public move as a “reverse merger.”

NYSE: DM

Phew. Ultimately, what will result is Desktop Metal being traded under the “DM” ticker symbol on the NYSE, with the (combined) company estimated to have up to a $2.5 billion post-transaction equity value.

The Desktop Metal announcement also notes:

“Transaction to provide up to $575 million in gross proceeds, comprised of Trine’s $300 million of cash held in trust (assuming no redemptions) and a $275M fully committed common stock PIPE at $10.00 per share, including investments from Miller Value Partners, XN, Baron Capital Group, Chamath Palihapitiya, JB Straubel, and HPS Investment Partners.”

And:

“All significant Desktop Metal shareholders including, Lux Capital, NEA, Kleiner Perkins, Ford Motor Company, GV (formerly Google Ventures) and Koch Disruptive Technologies will retain their equity holdings through Desktop Metal’s transition into the publicly listed company.”

Desktop Metal has, of course, been the recipient of massive funding rounds in the past, and has one of the largest valuations in the additive manufacturing industry. The company is one of a relatively few to reach “unicorn” status, with more than $1 billion valuation. This move, though, will take the company well beyond a base unicorn with its new estimated value.

While any company making a large financial move in current conditions, given the massive economic difficulties that have emerged during the ongoing global pandemic, is big news, it seems this environment has been serving Desktop Metal rather well. The company was among those offering services to produce needed goods for decimated supply chains, including partnering among a consortium of 3D printing companies to produce nasopharyngeal testing swabs.

Today, the company notes that “it will become a publicly listed company in order to accelerate its growth trajectory within the rapidly growing additive manufacturing market and capitalize on the strong secular tailwinds supporting the reshoring of manufacturing and supply chain flexibility.”

Desktop Metal is among those betting big on the future of additive manufacturing. Interestingly, they also note that in addition to accelerating growth and product development — common themes during any financial move — they “will also use the proceeds to support constructive consolidation in the additive manufacturing industry.”

Will we be seeing more mergers and acquisitions (not just a “reverse merger”) with Desktop Metal driving consolidation in a maturing industry?

Update 8/26: I spoke with Desktop Metal Founder and CEO Ric Fulop for more details about what we can expect from this big move.

Via Desktop Metal, Trine Acquisition Corp., and SEC

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