Essentium Inc., a 3D-printing startup, is poised to go public in a deal that values the company at nearly $1 billion.
The Pflugerville-based company, founded in 2013, plans to go public through a merger with blank-check firm Atlantic Coastal Acquisition Corp. After the merger with the special purpose acquisition company, Essentium will trade on the Nasdaq under the "ADTV" ticker.
Essentium makes materials and machines for industrial 3D printing. On its website, it says one of its printers, the HSE 280i, can handle additive manufacturing "five to 15x faster than the competition," using dual extruders in a way that combines the flexibility of 3D printing with the productivity of traditional manufacturing. Customers already include big players such as the Department of Defense and Ford Motor Co.
In a Dec. 1 letter to employees, CEO Blake Teipel said the deal represents "a momentous day" for the company.
"I expect this transaction will provide significant growth opportunities for our company, our strategic partners, our customers, our suppliers, and our entire team," he wrote. "This accomplishment is not only a testament to the technology and the integrated business we have built together, but also to the dedication of our team, which has led us to this opportunity and to the actualization of our disruptive additive manufacturing strategy."
In the securities filing that included the letter to employees, Essentium said no staffing changes are expected as a result of the deal, which is expected to close in the first quarter of 2022. The current management team is expected to remain intact.
Essentium had raised about $22 million in a series A round in 2019 led by BASF Venture Capital. Along with that infusion of capital, the company relocated from College Station to just north of Austin in Pflugerville. Its other investors have included Belgium-based Materialise NV, which makes software for 3D printing, and Genesis Park LP, the Houston-based private equity firm of investor Paul Hobby.
As of the 2019 funding, Essentium had about 170 employees. The current headcount was not immediately clear.
Those shareholders are rolling over all of their equity into the combined company, which will have a pro forma enterprise value of $974 million, including $346 million in cash on the balance sheet following the transaction. The go-public deal also includes $40 million in what's known as "PIPE" funding — private investment in public equity — from investors including BASF and Atalaya Capital Management.
The new investment is largely directed at funding growth, and the company noted it plans to expand on its existing polymer and composite materials, as well as developing metal additive systems for new uses.
Teipel acknowledged that the news leaked out a few days before the deal was cemented, and his letter gives us a glimpse at the private nature of going public.
"As we prepare to enter the public markets, there may be more rumors or speculation about our company’s plans, so we appreciate your understanding and discretion in this matter," he wrote, noting SEC rules that can pose challenges to discussing the business's positions. "... We must avoid speaking publicly about this process and our business metrics and financials. Accordingly, please refrain from making any statements about our company or this event in open forums (including to friends or family; online forums such as Facebook, Twitter, LinkedIn, Reddit; via email, to existing or prospective clients, etc.). Confidentiality will be critical as we move through the go-public process and enter operations as a public company."
It's notable that Essentium chose the SPAC route to public markets. SPAC deals typically allow smaller companies to go public, and in a faster timeframe than a traditional initial public offering. Although around for decades, the volume of SPAC deals really started to take off last year and in the early part of 2021. As of Dec. 21, 567 SPAC IPOs had raised more than $153 billion this year — far eclipsing the $83.3 billion raised in 248 SPAC IPOs in 2020, according to SPACInsider.
Several other 3D-printing companies have gone public in the past year or so via SPAC mergers, including Desktop Metal Inc. (NYSE: DM) and Velo3D (NYSE: VLD).
SPAC popularity has waned a bit in the latter half of the year, especially after rules were changed around how companies can treat warrants, which convey rights to buy future shares. However, SPAC proponents point out the mergers are still useful and expedient ways to raise funds and reach a new set of shareholders. They can also bring increased public attention and, likewise, scrutiny.
Once the deal is done, Essentium would be the only public company based in Pflugerville, according to Austin Business Journal's list tracking local public companies.
In addition to the Pflugerville HQ, the Essentium website lists a sales and marketing office in Waco, plus offices in California, Singapore, Germany and France.
