Last month, Nikon announced its intention to ramp up its investment in the additive manufacturing space via the takeover of SLM Solutions, one of the leading metal 3D printing firms. 

It followed the company taking majority ownership of Morf3D last year, and proceeded Nikon making investments in Hybrid Manufacturing and Optisys.

This growing interest in additive manufacturing comes as part of a medium-term vision, in which it sees digital manufacturing as an opportunity to drive growth. 

In SLM Solutions, the company has ambitiously targeted a complete takeover, securing an irrevocable undertaking with key shareholders who occupy 61.1% of SLM shares, and providing the remaining shareholders with an option to cash in at 20 EUR per share. 

It is expected that the deal will be complete sometime next year, and below is what we know about why the move made sense for both sides, what Nikon can offer SLM Solutions, and what happens next. 

Put simply, Nikon is aiming to become a leading and global player in metal additive manufacturing by offering ‘innovative manufacturing solutions.’ In acquiring SLM Solutions, a company that has sold more than 750 metal additive manufacturing machines to more than 150 companies around the world, Nikon believes it will be well on its way to achieving that goal.

For Nikon, digital manufacturing has been set as a core growth driver within a Medium-Term Management Plan outlined earlier this year. In a document summarising the rationale behind the takeover, Nikon says that through the acquisition of SLM Solutions, it will obtain brand power and market share in the growing metal AM sector, access to SLM’s diversified customer base, and a team that consists of ‘strong and experienced’ management and ‘talented’ technical engineers and sales professionals. The slides in this document were presented by Nikon President and CEO Toshikazu Umatate and Yasuhiro Ohmura, Senior Vice President and General Manager of Office of the President to reporters, investors and analysts in September. 

Though Nikon is not willing to discuss its acquisition of SLM Solutions any further until the closing of the deal, Umatate did provide a comment when the acquisition was announced last month. He said: “By acquiring SLM Solutions, Nikon is taking an important step towards our Vision 2030. 3D printing will revolutionise mass production by enabling our clients to manufacture highly complex parts, reduce cycle time, carbon emissions, energy costs and waste.”

As with most takeovers, the terms aren’t so simple. Nikon is targeting a voluntary public takeover of all outstanding shares of SLM Solutions on a fully diluted basis. It already has secured a 61.1% of the total share capital on a fully diluted basis and has the backing of the Management and Supervisory Board of SLM, as well as irrevocable undertakings from three SLM key shareholders, including Elliott Advisors. To secure the remaining shares, Nikon is offering a cash consideration of 20.00 EUR per share. The offer price represents a premium of 83.7% to the XETRA volume-weighted average share price of SLM in the three months prior to and including September 1, 2022.

The total transaction value of the takeover, which is not subject to a minimum acceptance threshold, is 622 million EUR or 84 billion JPY. 

Nikon is to fund this takeover with existing cash in line with the capital allocation framework of its Medium-Term Management Plan. In line with that plan, it set aside 200-300 billion JPY for mergers and acquisitions as part of a 700-800 billion JPY growth strategy. SLM Solutions represents the ‘first of such projects.’

Nikon says that 'contribution to profit from this acquisition will be limited during the period of our Medium-Term Management Plan, however we expect it to contribute to the consolidated earnings of the entire Nikon Group into 2030.'

Vision 2030 is a Nikon initiative in which the company is aiming to become a ‘key technology solutions company in a global society where humans and machines co-create seamlessly.’ Through these endeavours, Nikon will look to provide solutions that ‘drive innovation and enhance human potential to build a prosperous and sustainable world.’ Its steps to get there include operating in lockstep with customers to support their innovation between 2022-2025, and beyond that, jointly innovate with customers to deliver diverse solutions that address their challenges.

In the outline of its Digital Manufacturing business strategy, Nikon expects that by 2030, the space industry in particular will require ‘high-precision components in complex shapes,’ while the automotive industry will ‘focus on weight reduction for electrical vehicles and other products.’ Nikon will address these challenges by providing ‘additive processing and riblet processing’ for end products, components, and contract processing.

Through its additive processing efforts, Nikon has already launched its own Directed Energy Deposition (DED) systems, while recently investing in Hybrid Manufacturing and Optisys, as well as acquiring Morf3D.

Though SLM Solutions is restricted from saying too much before the acquisition deal closes, the company did provide the following statement to TCT:

“In its Vision 2030 statement, Nikon aims to become a key technology solutions company in a global society where humans and machines co-create seamlessly, and it emphasised its strategic focus on digital manufacturing. Nikon believes that growth in digital manufacturing can best be achieved by the adoption of metal additive manufacturing. SLM Solutions, a tech pioneer in metal AM, is a perfect solution-fit for Nikon’s 2030 vision.”

In the initial press release, SLM Solutions CEO Sam O’Leary also noted that partnering with Nikon would ‘further extend our technology leadership position’, referencing Nikon’s deep technological expertise and heritage.

That is unknown. In 2016, it appeared that GE Additive would acquire SLM Solutions alongside Arcam in a combined deal worth up to 1.4 billion USD. Back then, GE was offering 38 EUR cash per SLM share, a premium of around 37% on the company’s stock price at the time, which equated to around a 900 million EUR. At a vital juncture in the deal’s development, 20% SLM shareholder Elliot Advisors rejected the bid, making it difficult at that time for GE to reach its minimum acceptance threshold. GE instead acquired Concept Laser. 

When asked by TCT why SLM and Elliot Advisors were willing to accept terms lower in value six years on, the company declined to comment.

In a summary (not verbatim) of a question-and-answer session during a briefing session held on Friday September 2, 2022, Nikon described metal 3D printing as an area where it can ‘take advantage of the optical technology’ that it has cultivated over several decades, its precision positioning technology developed in such business lines as its semiconductor lithography division, and its image processing technology to ‘assist with monitoring during laser processing.’

An SLM statement given to TCT added: “Nikon has more than a century of history in developing cutting-edge opto-electronic technology and precision equipment, with its products used in applications ranging from advanced semiconductor manufacturing and mass production of panels for televisions and smart devices, imaging products, medical systems, automotive and satellites. SLM Solutions’ globally established install-based across several industries including aviation, aerospace, automotive, energy, medical, tooling, and academia will even further fuel the rapid adoption of metal AM.

“Nikon’s capabilities in the fields of high-precision measurement and optical technologies, as well as its ability of leading-edge system integration, will be essential in unlocking the potential of metal additive manufacturing.”

SLM also stated that Nikon has 'recognised the significant changes SLM Solutions has enabled that have led to record-breaking milestones for the company' and that 'it is clear Nikon does not wish to disturb the accelerated path SLM Solutions and its team is on and will encourage forward momentum by powering stability in the supply chain.' 

As of September 30, the acceptance period for remaining SLM shareholders has commenced. During this period, which will end at midnight (CEST) on November 1 before a potential two-week extension, SLM shareholders can accept the Takeover Offer and tender their shares at a price of 20 EUR per share in cash. Subject to the review of the offer document, SLM’s management board and supervisory board intend to recommend SLM shareholders accept the offer and have also committed to tender their shares into the Takeover Offer.

In the investment agreement signed between the two companies on September 2, Nikon has committed in a legally binding manner to not enter into a domination and/or profit loss transfer agreement for at least three years.

Following the successful completion of the Takeover Offer, to the extent commercially reasonable and market conditions permitting, Nikon intends to examine whether to initiate a delisting of SLM - SLM is currently listed on the Frankfurt Stock Exchange. Typically, a parent company needs to own 90% shares of a subsidiary to delist it. In 2018, after increasing its ownership to nearly 95%, GE made the same move with Arcam.  

With the acceptance period having commenced, the process of Nikon’s acquisition of SLM Solutions will proceed in accordance with German law. The takeover is thus expected to be completed sometime between January and June of 2023, subject to the approval of the relevant regulatory authorities. Nikon has also stated that it will continue to pursue steady growth, both organic and non-organic, in accordance with its Medium-Term Management Plan.

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