3D Systems entered into an agreement to acquire Xerox Corporation’s Wilsonville, Oregon, product design, engineering and chemistry group, as well as related assets for US$32.5 million in cash. Both companies expect the transaction to close before the end of 2013.
3D Systems (3DS) of South Carolina develops 3D printers, as well as related materials and IT infrastructure, to create products with plastics, metals, ceramics and edibles, among others. The tools provided by 3DS – including stereolithography – are typically used to rapidly design, create, communicate, prototype or produce real parts. The company utilizes Xerox print heads for a range of its multi-jet systems, such as the ProJet series 3D printers.
“We are pleased to expand our relationship with an innovative partner of the caliber of Xerox and expect that acquiring some of the Xerox Wilsonville engineering team, together with their state-of the-art development labs and selected licensed IP, to catapult our 3D printers’ development and manufacturing capabilities forward,” stated Avi Reichental, President and CEO of 3D Systems. “This bold step is consistent with our belief that we must act quickly and decisively to extend and cement our marketplace leadership position by taking full advantage of the window of unprecedented opportunity in front of us.”
As part of the agreement, 3DS expects to add more than 100 experienced Xerox engineers and contractors specializing in product design and materials science to its global R&D team and immediately begin to operate its own facility within the Xerox Wilsonville campus. “This deal takes advantage of Xerox's world-class capabilities and expands our relationship with 3D Systems in the exciting and dynamic 3D printing industry," stated Kevin Warren, President of Xerox Strategic Growth Initiatives. “It emphasizes how we are leveraging our expertise while we continue to evolve our business model and pursue strategic growth opportunities.”
Xerox will maintain ink and print head development resources along with research relevant for digital printing and the 3D markets. In connection with this investment, 3D Systems expects to increase its annual R&D expenditures by approximately 75 percent to 100 percent over the next few years as it completes certain Xerox related engineering services commitments.
“The stronger our marketplace leadership, the more powerful our economic model becomes,” stated Reichental. “Simply put, a solidified position translates directly to higher revenue, higher profitability and greater earnings power over time and we are willing to sacrifice short term earnings to get there faster.”