3D Systems Corporation: Can HP Afford To Acquire It?

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When Hewlett-Packard Company (NYSE:HPQ) entered the 3D printing segment, there were speculations that 3D Systems Corporation (NYSE:DDD) or its peers could become an acquisition target. Even 3D Systems’ CEO Avi Reichental was worried about HP’s entry into the 3D printing segment. Earlier this week, the Palo Alto-based tech giant announced that it would split its business into two.

HP’s split may fuel M&A speculations in 3D printing

HP’s PC and printing business will be grouped into what would be called HP Inc. Its enterprise operations such as cloud, corporate hardware and services will be part of the second entity called Hewlett-Packard Enterprise. Stifel analyst Patrick Newton says that the new HP Inc will potentially disrupt the 3D printing industry. The split of Hewlett-Packard could once again fuel the M&A speculations around 3D Systems and its peers.

The new HP Inc will become a standalone entity with an opportunity to fully use its balance sheet and a more focused management. So, analysts believe that it would try to expand its business through aggressive expansions. But AtonRa Partners says that 3D Systems is unlikely to be an acquisition target for HP Inc. That’s because the Rock Hill-based company will be a massive deal for the new HP.

Acquiring 3D Systems could prove risky for HP

Analysts estimate that HP Inc will have a market value of about $30 billion. Hewlett-Packard has stated that much of its debt load of $19.8 billion will fall on the PC and printing entity HP Inc. In an acquisition scenario, 3D Systems will be valued above $6 billion as the company currently has a market value of $5 billion (and then add some premium).

What’s more, acquiring 3D Systems could prove risky as it won’t be easy to integrate. The 3D printing company has purchased about 50 companies in the last few years. Integrating all those businesses will be pretty difficult. Not to mention that the $12 billion Autonomy Corp acquisition is still haunting HP executives.

According to AtonRa Partners, HP could expand its portfolio through acquisition of smaller 3D printing companies such as Voxeljet, ExOne and Arcam.

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