Xaar is selling a further tranche of its 3D printing arm to Stratasys, among the leading suppliers of 3D printers with annual sales approaching $670 million.
Stratasys first became a partner in the business, which combines Xaar’s piezo printhead technology and high speed sintering, in July last year. This led to the formation of Xaar 3D Ltd. The aim has been to bring the high speed sintering technology from the lab to the market, increasing the productivity of 3D printing.
Stratasys has extended its stake from 15 to 45% on terms agreed last year rating $10 million for Xaar. The new deal includes a provision for Stratasys to acquire the 55% of the shares that remain in Xaar’s ownership, providing Xaar’s shareholders agree to the deal. That would raise at least a further $33 million.
At this point the deal will bring in a welcome $10 million for the Huntingdon printhead specialist. The company under CEO Doug Edwards has diversified away from dependence on the ceramic tiles sector, but general economic uncertainty and a crowded market with subdued demand for new printheads has dented the company’s results.
The company has suffered a £4.3 million revenue reversal after inventory of the 1201 print head was returned to the business, and it has consequently set aside £5.7 million because of this, which will affect the interim results which had been due at the start of the month. Xaar postponed publication of these for a further ten days, so the impact of the Stratasys deal can be included in commentary and in settings with analysts.
The company has also been seeking a partner for its thin film technology printheads, recognising that the applications for these printheads, firing aqueous fluids, are greater than for the portfolio of piezo printheads that established Xaar’s name. Scaling production and convincing OEMs to adopt the printhead is an expensive business. It is also a highly competitive sector with the likes of Fujifilm and Epson fighting for share in piezo printheads while interest is growing in thermal printhead technologies.
The announcement of the Stratasys deal has already helped the Xaar share price bounce back from the hit when announcing the profit warning the week before, but not enough to recover to the peak level of the last 12 months.
The expectation is that second half revenues will be similar to the £22.5 million achieved in the first six months of the year. At the end of June, the company had cash reserves of £21.6 million.