Sector Snapshot

The U.S. manufacturing industry has been staging a comeback in recent years, thanks to companies making a slew of innovative new products, such as medical devices. In 2013, one relatively new manufacturing subsector that stood out was three-dimensional printers.

Once a product is designed on a computer, the 3D printer functions much like an ink-jet device, except the "ink" that jets out is a plastic filament that moves left to right, up and down, as a means to construct an object layer by layer. The plastic dries, and the end result can be anything from articles of clothing to pieces of machinery or weaponry. Smaller enterprises are now becoming more innovative, as 3D printing grants manufacturers the potential to fundamentally change the economies of scale as the technology is now on the cusp of becoming more mainstream and affordable. There are now desktop 3D printers for as little as $500.

Notable Deals

Acquisitions were rampant in the 3D printing niche in 2013. Perhaps the most significant was the June sale of MakerBot Industries to Stratasys Ltd. (Nasdaq: SSYS) for $403 million in stock, with an additional $201 million in performance-based earnouts. Stratasys, a larger industrial 3D printing company based in Minneapolis and Israel, had been acquisitive in the past. In 2012, it picked up rival Israel's Objet Ltd. in a stock deal valuing the combined companies at about $1.4 billion.

With MakerBot, it now owns what many observers consider a pioneer in the desktop 3D printing space. MakerBot, founded by Bre Pettis (pictured) who remains as CEO, continues to operate independently out of a new factory in Brooklyn, where it makes various types of printers that can help other manufacturers produce thousands of objects.

"Our challenge now is to make 3D printing friendly, accessible and affordable," says Pettis.

With more deals like this taking place, the entire 3D industry is growing rapidly, with items including prosthetic devices and prototypes for innovative technology are also being printed on some machines.

In May, 3D Systems Corp. (NYSE: DDD) purchased Rapid Product Development Group for an undisclosed amount. Rapid Product, headquartered in Escondido, Calif., provides on-demand additive and traditional manufacturing services, used to make prototypes of products. 3D Systems provides printing services, including printers, print materials and custom parts that are used to design and make prototypes of parts. The deal was announced on the heels of 3D Systems' buying Geomagic Inc., a company that makes software for 3D content, in January 2013.

The deal also follows the purchase of PrintForge 3D Ltd., a company that makes 3D printers, by Massive Dynamics Inc., a designer and manufacturer of Apple and Android accessories, for an undisclosed price. PrintForge, based in Hong Kong, also makes scanners and printing-related software that produces objects by stacking layers of material, like plastic or metal, on top of one another. Like Stratasys and 3D Systems, Massive stated that the deal is expected to help the Cupertino, Calif.-based company better serve the manufacturing industry. Massive's products include an iPhone case to store an external battery.

Coming Up

The possibility of a 3D printing buying spree among the industry's major players is a likely scenario, reports say. North Huntingdon, Pa.-based ExOne (Nasdaq: XONE) and Munich-based EOS GmbH are both 3D technology providers currently on the hunt. So is Stratasys, which announced in November that it established a $250 million credit facility and is exploring options for entering the metals printing marketplace. This could mean further consolidation in the 3D printing industry, as several companies in the space are reportedly targets, including 3D Systems. Germany is home to several potential targets that may come on the market in 2014, including Borchen-based ReaLizer GmbH, Lubek-based SLM Solutions GmbH and Lichtenfels-based Concept Laser.

Investors expect that 2014 will bring a lot more excitement from 3D printing, predicts Ben Procter from Watermill Group.

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