04-05-2001: 3D Systems and DTM Corporation announced a merger
It was the first major consolidation in the history of the 3D printing industry
On April 5, 2001, 3D Systems and DTM signed a merger agreement under which 3D Systems would acquire all outstanding shares of DTM's common stock. The acquisition brought together two leading companies from the still young and emerging AM industry, combining their complementary products and customer bases, and expanding 3D Systems’ global reach. The transaction was valued at approximately $45 million.
DTM (DeskTop Manufacturing Corporation) was founded by Carl R. Deckard, the inventor of SLS technology. After it was patented, Deckard licensed the technology from the University of Texas at Austin, where he had conducted his research, which enabled him to launch the company. DTM specialized in manufacturing rapid prototyping systems based on SLS technology. Its flagship system, the Sinterstation 2500plus, allowed for the fast production of three-dimensional prototypes, parts, molds, tools, and casting patterns directly from CAD data. DTM also supplied the powdered materials used in the SLS process.
Before the acquisition, DTM, alongside 3D Systems and Stratasys, was one of the three key players in the U.S. market for industrial rapid prototyping systems. The company held an extensive patent portfolio related to SLS technology, which limited competition, particularly from foreign manufacturers who were unable to enter the U.S. market due to patent barriers.
In April 2001, 3D Systems and DTM announced the signing of the merger agreement. The plan was for 3D Systems to launch a tender offer for DTM’s shares no later than five business days after securing financial commitments sufficient to fund the acquisition and meet 3D Systems’ ongoing capital needs. The company anticipated securing financing by May 3, 2001, with the tender offer closing in June 2001. Following the tender offer, the merger would be finalized. Employee stock options would be converted into a cash equivalent. The acquisition was ultimately completed in August 2001.
The merger raised serious concerns from the U.S. Department of Justice Antitrust Division. On June 6, 2001, the Department filed a civil lawsuit against 3D Systems, alleging that the acquisition of DTM violated Section 7 of the Clayton Act, which prohibits transactions that lessen competition.
The complaint stated that 3D Systems and DTM were two of the three dominant players in the U.S. industrial rapid prototyping system market, and their merger would reduce the number of competitors from three to two, thereby diminishing competition. Additionally, both companies held extensive patent portfolios that effectively blocked foreign competitors from entering the U.S. market.
On August 16, 2001, an agreement was reached with the Department of Justice. Under the proposed final judgment, 3D Systems and DTM were required to license their patents related to rapid prototyping systems to a company selected by the U.S. government. The license would cover a specific technology area (SLS or SLA) and enable a new player to enter the market, thereby restoring competition.
Source: www.netcomposites.com
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