Desktop Metal said on Wednesday it has agreed to go public through a reverse merger with blank-check company Trine Acquisition, in a deal that values the metal 3D printing technology provider at $2.5 billion.
It is the latest example of a technology company opting to go public through a so-called special-purpose acquisition companies (SPAC) merger, following the likes of space tourism start-up Virgin Galactic and electric vehicle maker Nikola.
Founded by Chief Executive Ric Fulop, a former investor at North Bridge Venture Partners, Desktop Metal has raised $438 million from investors including BMW iVentures, Koch Disruptive Technologies and Ford Motor. It was valued at $1.5 billion in its last investment in January 2019, according to PitchBook data.
The $575 million proceeds from the merger with Trine, including $275 million in the form of a private investment in public equity (PIPE) from institutional investors like Chamath Palihapitiya and Baron Capital, will be used to fund acquisitions in the 3D printing industry and fuel internal growth, said Fulop.
“The industry is highly fragmented today,” Fulop said. “We want to be a consolidator in this industry. That’s our plan of record and we plan to execute that.”
The Burlington, Massachusetts-based company had to lay off employees earlier this year as it faced disruptions in physical production during the pandemic, but Fulop said businesses are growing again.
SPACs like Trine raise money in an initial public offering (IPO) to pursue an acquisition at a later date, with the acquired company then going public as a result of the deal.
The ease of talking with one SPAC sponsor rather than a large group of prospective investors in an IPO roadshow was one of the factors in Desktop Metal’s decision to opt for the deal, Fulop said.
“You’re able to work directly with a sponsor and go the market together. That’s probably easier to do in an environment like what we have today,” said Fulop.