3D printing technology companies Stratasys and Desktop Metal have announced plans to merge their operations in an all-stock deal valued at $1.8bn.

As per the agreement, Desktop Metal stockholders will receive 0.123 ordinary shares of Stratasys for each Desktop Metal Class A common stock they own.

The combined entity will be 59% owned by Stratasys shareholders and the remaining stake will be held by Desktop Metal stockholders.

Stratasys hopes that the acquisition will allow it to diversify its customer base by enabling it to provide end-to-end solutions across the whole manufacturing lifecycle, from designing, prototyping, and tooling to mass production and aftermarket operations.

Currently, the US-Israeli company caters to industries such as aerospace, automotive, consumer products, education, healthcare and fashion.

Stratasys CEO Yoav Zeif said: “The combination with Desktop Metal will accelerate our growth trajectory by uniting two leaders to create a premier global provider of industrial additive manufacturing solutions.”

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The combined entity is anticipated to generate $1.1bn in revenue in 2025.

The board of directors of both companies have approved the merger, which is expected to close in the fourth quarter of 2023, subject to customary closing conditions.

Desktop Metal co-founder, chairman and CEO Ric Fulop said: “The combination of these two great companies marks a turning point in driving the next phase of additive manufacturing for mass production.

“We are excited to complement our portfolio of production metal, sand, ceramic and dental 3D printing solutions with Stratasys’ polymer offerings.”

The transaction comes as Nano Dimension, the largest shareholder of Stratasys with a 14.2% stake, tries to increase its stake in the company.

Nano has launched a hostile $18 per share all-cash tender offer to acquire between 53% and 55% of Stratasys.

Stratasys said it “will carefully review and evaluate the offer to determine the course of action”.