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Protolabs to acquire 3D Hubs for up to $330M

Protolabs today announced it plans to acquire Amsterdam-based 3D Hubs, an online manufacturing platform that provides engineers with on-demand access to a global network of approximately 240 manufacturing partners.

The transaction creates a comprehensive digital manufacturing offer for custom parts, expanding Protolabs’ breadth of capabilities as well as adding a broader offering of pricing and lead-time options, according to a news release from the Maple Plain, Minn-based company.

“The addition of 3D Hubs provides Protolabs a platform to evolve our service model to provide unprecedented manufacturing flexibility to our customers,” said Rob Bodor, Protolabs’ VP and GM of the Americas and incoming president & CEO. “Our combined organizations will provide the market an industry-leading digital manufacturing solution to serve their needs from idea to prototype to full end-use part production. Together we can fulfill nearly every custom manufacturing need across the product life cycle.”

Founded in 2013, 3D Hubs has enabled the production of more than 6 million custom parts and products through its digital platform. 3D Hubs has raised over $30 million in funding from Balderton Capital, EQT Ventures, Endeit Capital, Hearst Ventures, DOEN, Future Shape, Rockstart, and other investors.

“The entire 3D Hubs team is thrilled to join Protolabs and continue to revolutionize the manufacturing industry through innovation,” said 3D Hubs CEO Bram de Zwart. “At 3D Hubs, our goal is to empower companies to create revolutionary products through supply chain efficiency and reliability. We are confident that partnering with Protolabs will help us advance that mission.”

Protolabs has agreed to pay $280 million at closing, funded with $130 million in cash and $150 million in Protolabs common stock. It will pay an additional $50 million, contingent on performance-based targets over two years after the close, funded with 50% cash and 50% Protolabs common stock. Protolabs has also established an employee incentive fund payable to 3D Hubs employees based on achievement of both financial performance and employee retention targets.

Protolabs had a tough year in 2020, suffering an 8.86% sales drop in the second quarter compared with the previous year. Without COVID-related orders, the company’s medical sales declined by 14% in Q2, according to an earnings call transcribed by The Motley Fool. In the third quarter, overall sales declined 8% compared with Q3 2019.

Protolabs anticipates the acquisition of 3D Hubs will accelerate its revenue growth rate and be marginally dilutive to non-GAAP earnings per share in 2021. 3D Hubs’ 2020 revenue is estimated to be $25 million and the company’s revenue has had a compound annual growth rate of over 200% since 2017. The transaction is expected to close by the end of January, subject to customary closing conditions.

“The acquisition of 3D Hubs is part of the continued evolution of Protolabs as the digital manufacturing leader, serving more and more of our customers’ needs,” said Protolabs CEO Vicki Holt. “Protolabs’ leading in-house technology-enabled manufacturing services combined with 3D Hubs’ global network of premium manufacturing partners will yield the greatest value to our customers for years to come.”

Holt is retiring effective March 1, 2021, after leading the company for the past seven years, and will continue to serve on the board through May 2021. -Medical Design and Outsourcing