Xaar agrees 3D disposal
Wednesday, October 6, 2021
Xaar has agreed to dispose of its stake in Xaar 3D to joint venture partner Stratasys.
The inkjet developer had already classified the operation as ‘held for sale’ in its first-half results, in anticipation of completing the sale in H2.
Xaar 3D made a loss of £3.5m on sales of £1.47m in the period due to increased R&D expenses and delays to its beta programme because of Covid restrictions. In 2020 the operation had expenses of £7.17m.
In a statement, Xaar said that while the business had made progress this year, the consequence of the delays meant that it was anticipated that Xaar 3D “would require more investment than originally planned”.
As a result, Xaar’s board has conditionally agreed to amend the original call option between the two companies.
“This agreement will provide Xaar 3D with the best opportunity to complete the commercialisation of the product range in the shortest time, would lead to an immediate injection of cash and will enable Xaar to focus on its core business. Xaar will be entitled to receive royalties on products and services sales for up to 15 years,” Xaar stated.
The revised consideration is worth up to $33.83m (£24.9m).
It includes a number of changes to the original terms, including the cap on the 2% initial earn-out being increased by $6.375m to $16.375m, and the level of royalty increased from 2% to 3% of the gross revenue of “Stratasys, Xaar 3D and their affiliates which is recognised as earned from sales of Xaar 3D's products and services during the relevant period”.
Xaar CEO John Mills said: "This agreement will provide Xaar 3D with the best opportunity to continue its progress and leadership in the field of industrial 3D printing. We have enjoyed our partnership with Stratasys and look forward to continuing to work with them to supply printheads to Xaar 3D and share in the long-term success of the business. The agreement will also allow us to focus on our core business and other opportunities in the market that will support our long-term growth strategy."
The two firms originally set up the venture in the summer of 2018.
Stratasys introduced the H350 3D production-level printer, the first to be powered by Xaar 3D’s powder-based Selective Absorption Fusion (SAF) technology, in April.
The Xaar 3D team will join Stratasys.
Ronen Cohen, general manager of Xaar 3D said: “We formed Xaar 3D on the premise that we could help existing powder bed technology make a major leap forward, and that’s what’s happening thanks to SAF technology.
“We have been able to significantly improve thermal management for more consistent and reliable parts while giving customers the production control they need. As part of Stratasys, we will continue to rapidly advance H Series 3D printer development while leveraging Stratasys’ global go-to-market infrastructure and blue-chip customer relationships to enable more customers to benefit from SAF-powered additive manufacturing.”
Stratasys had sales of $147m last year.