Why the Cimatron Acquisition Matters to 3D Systems

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3D Systems Corporation (NYSE: DDD) announced that it will acquire all outstanding shares of Cimatron Ltd. (NASDAQ: CIMT) for $8.97 per share in cash, the total transaction is valued at $97 million, inclusive of its net cash.

Cimatron’s products inserted into 3D Systems’ portfolio will seemingly strengthen its position in the fast-growing 3D design and manufacturing space. The acquisition is expected to be immediately accretive to 3D Systems’ cash generation and earnings per share (EPS) upon its closing.

A little background Cimatron: it is a leading provider in 3D CAD/CAM software products for manufacturing, and these products are being used by a growing number of companies worldwide for their 3D production molds, tools and dies. Cimatron has two major product lines, CimatronE and GibbsCAM, which each address companies’ CAD/CAM needs.

Avi Reichental, President and CEO of 3DS, commented on the deal:

We believe that the perfect strategic fit between our businesses, combined with expanded capabilities in product development, channel coverage and marketing, could present sizeable synergies that together offer significant long-term customer benefits and shareholder value.

The transaction will be subject to customary closing conditions, including requisite regulatory approvals and the approval of Cimatron’s shareholders. The boards of directors for both companies have already unanimously approved the transaction. The companies expect that the transaction will close in the first quarter of 2015.

Analysts might say that 3D is acquiring Cimatron for a nice discount considering the consensus analyst price target is at $10 and the company is being acquired for about 10% less at $8.97.

Cimatron reported its earnings in mid-November as $0.11 in earnings per share and $11.2 million in revenue compared to the previous year’s numbers of $0.11 in earnings per share and $10.3 million in revenue.

The earnings report also mentioned that Cimatron had posted 18 consecutive quarters of year-over-year growth. The company had an 88% gross margin and 16% operating margin for the third quarter, as well as, a net cash balance of $20.1 million or $1.87 per share.

Shares of 3D systems were up 6% at $37.31 in the noon hour of trading. The stock has a consensus analyst price target of $46.10 and a 52-week trading range of $32.64 to $97.28. It has a market cap of over $4 billion.

Shares of Cimatron were up over 42% at $8.67, in the noon hour of trading. The stock has a 52-week trading range of $5.21 to $10.75.

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