Arcam AB fka AMAVF

[charlie T colton]

RE:initial conventional "take-over bid", "blockers" and possible counter bids.

Arcam is a company that presently has an exceptional niche in Additive Manufacturing. The niche is with the technology and not the current customer base which is impressive in it's own rite. The possible unrealized applications are unknown to the general public, people that should be knowledgeable (the press and investment community), and even many here. Markets outside of aerospace and orthopedics are many. Arcam chose to focus on them because the immediate return on investment is greatest there. As the technology is proven in the most demanding applications and unit cost/value ratio becomes understood and attractive, other markets will follow suite.

Mining for information can yield unexpected results. Some time in the last two months I found something that I liken to "The Unauthorized History of Electron Beam Melting". I have tremendous respect for the author, Dr. Carolin Koerner. She's responsible for a huge amount of the research done on Electron Beam Melting outside of Arcam.

Excerpts from Additive manufacturing of metallic components by selective electron beam melting — a review.
From a historical viewpoint, the processing of large and voluminous steel parts was the initial motivation to use an electron beam as energy source. Thus, at the beginning of commercialisation, Arcam’s advertising strategy was based on the high power of the electron beam able to consolidate a large volume of steel per hour. Using SEBM for production of tool steel, injection mould inserts were considered as a promising field of application. Nevertheless, the focus completely changed during the last decade and Arcam’s focus is now on titanium and titanium alloys; steel is now hardly a topic
___________________________________________________________________


Körner Additive Manufacturing of metallic components by SEBM — A review


There has been some surprise that there hasn't been a competing offer or even the indication of other big buyers such as RR or PW or Alcoa. I am not surprised at all. The reason seems obvious to me. It would be akin to me playing cards with Warren Buffet. The game would only be possible on his terms and I heard somewhere that he doesn't like to make bad deals.

Repeated from an earlier post:

OK. Lets look at some of the expected/suspected potential bidders.
Rolls-Royce (page 27) Cash and cash equivalents 30 June 2016 --- £ 2,287,000,000.
Honeywell Cash and cash equivalents 2016 Q2 --- $5,045,000,000 US.
UTC (Pratt & Whitney) (page 34) Cash and cash equivalents 2015 --- $7,075,000,000 US.
Lockheed Martin (page 2) Cash and Cash Equivalents 2015 --- $1,090,000,000 US.
Raytheon (page 28) Cash and cash equivalents 2015 --- $2,328,000,000 US.
GKN (page 19) Cash and cash equivalents June 2016 --- £ 227,000,000.
Boeing (page 4) Cash and cash equivalents June 2016 --- $8,605,000,000 US.
Airbus (page 9) Cash and cash equivalents June 2016 --- € 7,965,000,000.

It appears that Airbus has the largest amount of cash on hand. What are the chances of them getting full corporate approval to spend 17% of their war chest and having all the financial items in order in a month to make a bid for Arcam. And be prepared to raise the stakes, if necessary. I'm not at all surprised that we haven't heard a counter bid yet.

For the record...
General Electric (page 7) Cash and marketable securities June 2016 --- $91,800,000,000 US.

For completeness I'll ad another piece of data:
Alcoa 3Q 2016 Consolidated Highlights - $1.9 billion cash on hand.


Forgive me for being so bold as to suggest that "The Market" is wrong about Arcam's value, present and future. Is Arcam misunderstood by the market? It would seem so.

30 Most Innovative 3D Printing Companies in 2016 - October 11, 2016
3D Printing Investing - Top 3D Printing Companies - April 4, 2016
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10 Best Industrial 3D Printers in Fall 2016


The possibilities for additive manufacturing are not misunderstood at GE. Neither are the realities.

3D printing will be their prime weapon, and will help to consolidate 845 parts into just 11 3D printed components. While far more cost-effective, this reduction in complexity will also speed up production, reduce fuel consumption by 20 percent, and make the engine 10 percent more powerful. What’s more, it will also be less heavy than existing engine alternatives.

“The physics is simple,” he said. “The more metal you have in the air, the more money you need to spend on the material itself and on the fuel to keep it flying. Also, an engine with fewer components reduces the number of parts you need to design, certify, inspect and make or order. 3D printing really is the game changer and it will totally change the way traditional supply chains operate and simplify them massively.”


I am somewhat surprised that the offer apparently met no resistance from anyone even even though GE was direct about it's intention to have complete control.

http://www.bwb.gv.at/Zusammenschluesse/Zusammenschluesse_2016/Seiten/BWB_Z-3200.aspx
The translated regulatory approval for antitrust clearance:

Merger notification - Announcement according to § 10 paragraph 3 line 2 KartG

General Electric Company; Arcam

BWB / Z-3200 08.09.2016

At the Federal Competition Authority on 09.08.2016 the following merger was notified:

Planned acquisition process:

General Electric Company (USA) intends to acquire sole control of Arcam AB (Sweden), a Swedish manufacturer of equipment for additive manufacturing. The proposed transaction relates to additive manufacturing (3D printing), metal powder for additive manufacturing, orthopedic implants.

Affected Business Type: Other goods

The deadline for submission of an application pursuant to § 11 paragraph 1 Cartel Act by the official parties (Request for examination of the concentration in antitrust court proceedings) ends on 10/06/2016.

Every entrepreneur whose legal or economic interests are affected by the merger may, within 14 days from this notice to the Federal Competition Authority and / or the Federal Cartel Prosecutor make a written statement.

Note: The intervening party has no right to a particular treatment of the utterance and acquires particular no party position in a possible proceedings before the Competition Tribunal.

Non-prohibition of the merger
The official parties have made no request for examination. The prohibition on implementation (§17 para 1 Cartel Act) is repealed with effect from 07.10.2016.

Apologies to all for the length.