Xaar 3D was formed in July 2018. Its focus is High Speed Sintering (HSS) and it holds all of Xaar’s HSS assets. At the time of its formation Xaar had an 85% stake, and Stratasys had 15%, but with an option to increase that to 30% in future.
This morning (12 September), Xaar announced a fundamental change to this arrangement that could see it cede control of the venture entirely. It plans to sell 20% of its holding to Stratasys for $10m (£8.1m), alongside a new call option whereby Stratasys can acquire the remaining 55% for “at least $33m”, exercisable over three years.
Immediately prior to the new deal, which is subject to shareholder approval, Stratasys will exercise part of the original option agreed last year to increase its ownership of Xaar 3D to 25%, for $4m.
In addition, Xaar will be entitled to an annual payment of 2% of revenues for 15 years (subsequent to the call option being exercised), up to a maximum of $10m.
“The proposed transaction creates a strong strategic partnership for the development and growth of Xaar 3D and unlocks value for Xaar's shareholders,” Xaar said in the announcement.
At the end of last year Xaar 3D had gross assets of £13.1m.
Xaar’s board said they believed the proposal represented a good deal for shareholders, who have seen the firm's dividend canned and the value of Xaar’s shares slump to a 52-week low after a series of setbacks at the business, which announced earlier this month it was delaying its interim results.
The group’s share price jumped by nearly 20%, to 70.31p on the news. (52-week high: 199p.)
An industry source described the announcement as “unexpected”.
“They are either preparing the business to be acquired by getting rid of things the acquirer isn’t interested in, or building a war chest of cash to go and acquire something or things,” the source said.
“One thing’s for sure, something very significant is going on and this isn’t the whole story.”
Xaar’s board said the group planned to retain the gross proceeds of $15.46m from the proposed transaction and proposed further investment, of which $7.25m will be used exclusively by Xaar 3D, which lost £400,000 last year.
“As previously announced, Xaar is currently undertaking a strategic review of its Thin Film business. On completion of this strategic review, Xaar will evaluate its ongoing cash requirements and the optimal shape of its balance sheet,” the group said.
Professor Neil Hopkinson remains with Xaar 3D as director of technology, and Xaar chief executive Doug Edwards stays on as chairman.
