Fathom Digital Manufacturing Corp. (NYSE: FATH), a participant within the on-demand digital manufacturing sector, acquired a non-binding acquisition proposal from CORE Industrial Companions, a Chicago-based personal fairness agency that performed a job within the firm’s consolidation and public itemizing efforts. This supply, valuing Fathom’s shares at $4.50 every, signifies a possible shift within the firm’s possession construction, provided that CORE Funds already possess about 63% of Fathom’s voting energy.

The proposal’s analysis rests with Fathom’s Particular Committee, consisting of Adam DeWitt, David Fisher, and Peter Leemputte, tasked with contemplating this supply alongside different potential methods or proposals. No particular timeline for decision-making has been set, and there’s no assure of a definitive settlement or transaction fruition.

CORE’s Historical past with FATHOM

CORE acquired FATHOM on September 26, 2019, by way of CORE’s portfolio firm Midwest Composite Applied sciences. The consequence was one of many largest world impartial AM service suppliers with over 80 3D printing machines. The ensuing entity quickly executed a sequence of acquisitions of different machine and 3D printing outlets round North America.

Fathom rang the opening bell of the NYSE on April 19, 2022. Picture courtesy of Fathom by way of LinkedIn.

In 2021, Fathom introduced its plans to go public by means of a merger with particular objective acquisition firm (SPAC) Altimar Acquisition Corp. II, a deal valued at $1.5 billion and anticipated to lift round $80 million by means of a Non-public Funding in Public Fairness (PIPE) at $10.00 per share. Fathom’s shares skilled fluctuations post-listing, ranging from a excessive of $10.53 after which stabilizing at round $7.

As one of many final 3D printing corporations to affix the development of SPAC mergers in 2021, Fathom might have benefitted the least from the general public markets. In 2022, the corporate skilled monetary challenges, with a third-quarter income lower of three.1% to $40.2 million and a considerable web lack of $(1,046.1) million, together with a major non-cash goodwill impairment. Regardless of this, year-to-date income elevated by 13.8% to $122.7 million, pushed by acquisitions and development in strategic accounts.

This led, in October 2023, to Fathom’s appointment of a brand new CEO, Carey Chen. Chen has been an working advisor with CORE since 2017 and has led such manufacturing corporations as Cincinnati Included, recognized for its massive space AM 3D printers. It’s anticipated that he will probably be concerned in righting the ship.

Non-public Fairness in 3D Printing Companies

CORE’s proposal suits into a bigger context of personal fairness’s evolving function within the 3D printing trade. Non-public fairness corporations like CORE have more and more influenced this sector, typically using methods like roll-ups, the place they consolidate smaller corporations to create extra aggressive and resourceful entities.

This development in the direction of consolidation is pushed partly by the present financial local weather, which has heightened the attractiveness of 3D printing applied sciences for personal fairness attributable to their potential for innovation and profitability. The transfer by CORE to amass Fathom aligns with this broader sample of strategic acquisitions and consolidation within the trade.

Apparently, Fathom will not be CORE’s solely service bureau play, which additionally consists of UPTIVE. Whereas Fathom was taken public, UPTIVE has remained personal, maybe suggesting that the personal fairness agency has been experimenting with a wide range of methods within the digital manufacturing house. Along with these two service bureaus, CORE has additionally backed 3DXTECH, a producer of 3D printers and supplies.

On this case, timing might not have been on Fathom’s facet by way of going public. Now, CORE has the chance to denationalise this arm of its AM investments and check out one thing new, even perhaps consolidating it with UPTIVE. Now is likely to be an ideal probability to take action, because the U.S. service trade will not be but at its peak and opponents, comparable to ADDMAN and Cumberland Additive, are starting to construct up their very own operations.