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Explained: Why Stratasys is acquiring Covestro’s additive manufacturing business

On Monday August 8th, Stratasys announced a deal worth up to a potential 80 million EUR that will see Covestro Additive Manufacturing integrated into the company early next year. 

Stratasys is one of the oldest names in the additive manufacturing (AM) sector, while Covestro is a chemicals giant that acquired the 3D printing arm of DSM in 2021 after a 1.61 billion EUR acquisition of the company’s Resins & Functional Materials (RFM) business

DSM had established itself as somewhat of a leader in the 3D printing materials space and had wanted closer ties with an additive manufacturing firm with proficiencies in hardware and software. But when Covestro made the move to acquire DSM’s RFM business, the additive manufacturing team ‘didn’t have a lot of options.’ At some point over the last 18 months, the DSM additive manufacturing team made their case to the Covestro Board of Directors, who in turn reached out to leaders in the AM space. 

“Covestro acquired several businesses from DSM, so we never had the opportunity to step back and say, ‘what would be the best way to address the future of our material business in 3D?’” VP of Covestro Additive Manufacturing Hugo da Silva told TCT shortly after the announcement. “It was great that the Board of Covestro listened to that, and they started engaging with some companies and obviously Stratasys. Everybody ended up happy.”

Here, we explain why Stratasys has moved to acquire Covestro Additive Manufacturing, why Covestro was willing to divest, and what both sides see as the big opportunities of this deal. 

Why does acquiring Covestro Additive Manufacturing business make sense for Stratasys?

As Stratasys has repeatedly referenced over the last two years, it is vying to become the outright leader in polymer 3D printing. This has seen the company expand its hardware offering to include Origin’s Programmable Photopolymerisation (P3) technology, RPS’ Stereolithography (SLA) technology and Xaar 3D’s Selective Absorption Fusion (SAF) technology – all via acquisitions. 

Covestro’s additive manufacturing business appealed to Stratasys because it has identified a need for a core material offering to supplement the aforementioned technologies, while also recognising a market demand for new 3D printing materials. Stratasys believes, with 250 patents and an additional 400 pending, that Covestro Additive Manufacturing is among the leaders in additive manufacturing materials, while also sharing the same vision, ambition and aspirations – “the number one success factor for an integration,” per CEO Yoav Zeif. 

Zeif continued: “Our strategy is all about polymer manufacturing – we are taking this industry from being a prototyping industry to a manufacturing industry. It doesn’t happen in one month, not one year, it’s a journey. Within this journey, you need the best to be with you because it’s a tough and challenging journey. I have no doubt that DSM and Covestro Additive Manufacturing – when you put together the portfolio, the patents, the people, the offering – is the best liquid resin/ powder that you can buy today, plus the roadmap going forward.”

Why is Covestro divesting its AM operations just 18 months after acquiring DSM’s Resins & Functional Materials business? 

When Covestro acquired DSM’s RFM business in 2021 in a deal worth 1.61 billion EUR, it would be fair to say DSM’s water-based polyacrylate resins, including its powder coating resins and radiation curing resins, were the main draw. 

DSM’s additive manufacturing business was acquired, as da Silva describes it, in a package deal. But the AM team’s aim was always to align with a leading additive manufacturing company. 

“We always had in our vision for the materials business to be closer and closer to a company like Stratasys – a leader in hardware, software, application,” said da Silva. “We always thought from the material side that hardware, software, design all working together would be more powerful to the industry, especially when it comes to addressing real industrial manufacturing applications.”

Covestro, meanwhile, saw the benefit in ‘optimising’ its portfolio, allowing it to place an even greater focus on its core industries. Upon engaging with leaders in the 3D printing space, the company was ‘convinced’ that Stratasys offered the optimal conditions to support the further growth of its Additive Manufacturing business. 

Until the deal is closed in the first quarter of 2023, Covestro Additive Manufacturing has assured customers via a newsletter that ‘nothing changes in the way you do business with us’ with ‘no planned changed to our organisation or our business model without proactive advanced notice and dialogue.’ 

What did Covestro add to the DSM AM team and why did they want to join a company like Stratasys?

Though the DSM additive manufacturing team always yearned to fall under the umbrella of Stratasys, there were benefits to its time working with one of the world’s largest chemicals companies. 

da Silva told TCT: “What we had in DSM was a library of chemistries. When we joined Covestro, we added to that library quite a lot and what Stratasys is taking into the deal is the entire library coming from DSM and Covestro.”

This, da Silva says, is good news for DLP technology, with Covestro Additive Manufacturing confident it has ‘several different background chemistries’ to play on, as well as photopolymers that are translatable from SLA to DLP. The company also enjoyed having access to Covestro’s TPU expertise, for example, which might bode well for users of powder bed technologies. 

Now it’s a part of Stratasys, da Silva suggests that being able to lean on the hardware, software and application knowledge makes his team ‘more powerful’ in the development of materials. 

Why didn’t Stratasys move for DSM’s AM team two years ago?  

Put simply, Stratasys had its focus elsewhere at this time. As it set off on its quest to become the leader in polymer 3D printing, Stratasys decided to first build outs its hardware portfolio. The company believes in RPS it has one of the most reliable and accurate 3D printing technologies, and has identified the way to take SLA to the next level is through material innovations. 

“The only thing that will make SLA jump to the next level is new chemistry,” Zeif said. “It’s about creating those materials that will have manufacturing properties. We know that it’s possible. There are new families of chemistry, there are new ways to formulate, and we will be there.”

Will Covestro AM’s materials remain open for others to use? 

Yes. Although a key driver for Stratasys’s acquisition was to add a core material offering to the P3, SLA and SLS technology portfolios, the company is committed to the more open materials strategy it has adopted in recent times. Via this strategy, Stratasys and its users had begun to benefit from the likes of Covestro Additive Manufacturing qualifying its materials on such platforms as the Fortus 450mc and Origin One. As the aforementioned Covestro newsletter noted, customers will be made aware in advance of any changes to the business model. 

“We are committed to our strategy. We have a strategy, and we follow it and we walk the talk,” Zeif said. 

Covestro Additive Manufacturing boasts an offering of 60+ additive manufacturing materials, including the Somos and Addigy brands.

What do both sides see as the big opportunities moving forward? 

As already referenced, Stratasys and the Covestro Additive Manufacturing team are most enthused about the opportunities in photopolymers. Work on ‘disruptive materials for DLP’ is already ongoing, while there are also said to be patents relating to PolyJet and material jetting that can be leveraged. 

“[There are] very exciting things that we will be able to do, only with the portfolio and the talent and the experience of the guys at Covestro Additive Manufacturing,” Zeif said. “There are PolyJet materials that can work on DLP, there are SLA materials that you can tweak to work on DLP or PolyJet. It’s not easy, but I see the synergy.”

“I don’t want to spoil but there are several very interesting technologies cooking in the kitchen,” da Silva added. “I can assure, from our knowledge where we sit as the material leader in the photopolymers, that [our] combination is very unique and when the deal is finally closed, [it will] put Stratasys in the number one position in that space.”

Is Stratasys likely to make further acquisitions? 

The deal to integrate Covestro Additive Manufacturing into Stratasys is another significant move for the company, and supplements the moves it made to acquire Origin, RPS and Xaar 3D. As it stands, the company now offers FDM, PolyJet, DLP, SLA and a powder bed technology in SAF, while also boasting extensive software capabilities and now a materials portfolio bolstered by Covestro Additive Manufacturing. 

But does Stratasys foresee more M&A further down the line? 

“The short answer is yes, we keep looking,” Zeif offered. “But we are doing everything within a framework, we are not shooting all over, we have a strategy. The strategy is about polymer manufacturing and the ability to deliver to our customers what we call superior application feed. You have a problem, we have the solution. The solution is hardware, software, material and service that will fit your problem in the best way.

“We are not selling what we have. We are developing solutions that you need. [That’s the] big difference over the last two and a half years. To do that, we’ll keep doing whatever we need internally, externally, but within this framework of polymers going to manufacturing.”


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