Arcam: Competing bid more unlikely than likely – Private Businesses

US industrial giant General Electric bid on both the Swedish and German Arcam SLM Solutions, both manufacturers of equipment for additive manufacturing or 3D printing, is not surprising. However, the timing is something of a surprise.

It says SEB’s equity strategist Christopher Lyrhem to the news agency Direkt.

“GE has for several years made acquisitions and force gathered to strengthen its position in this interesting production segment and an offer in the vicinity of 300 kronor is no surprise. however, I had thought it would take a few years until the Arcam had time to strengthen the order intake and earnings significantly, “he says and continues:

“While there are many financial reasons to acquire Arcam before this expansion benefited in time. GE is a customer of Arcam know the technology very well.”

the more players may be interested in Arcam’s Christopher Lyrhem convinced, but few have such a good opportunity for GE to benefit from the acquired technology, he said.

“a competing bid is more unlikely than likely. GE is one of the major industrial players that have made most of additive manufacturing , and can use Arcam’s capabilities in both the aviation industry and ultimately also in orthopedics. They are therefore easier than others to count on the revenue and cost synergies that technology creates. “

Another argument for GE’s acquisition of Arcam and the SLM means that the company will ensure that competitors do not have access to the smaller companies’ technology. in addition, the company control over Arcam metal manufacturing, which is a capital- and knowledge-intensive industry that will play a major role in GE’s mass production of its new aircraft engines in the coming years, says Christopher Lyrhem.

GE offer of SEK 285 per share for Arcam 53 percent over Monday’s closing price.

“It’s a hefty premium and high multiples, but they almost 6 billion GE bids are in this context not so much for them . What they buy is a solid patented and revolutionary technology in the very long term, to refine the production technology in many different ways, even beyond the aerospace and implants. In this context, the price tag of less magnitude, “said Christopher Lyrhem, who believe that GE would emerge victorious out of a possible bidding war.