This document provides a strategic analysis and plan for SpaceX to acquire 3D Systems, a leading 3D printing company. It first introduces SpaceX and the space exploration industry, noting challenges around agility, transporting materials to Mars, and manufacturing replacement parts in space. Acquiring a 3D printing firm is proposed to help address these challenges. Potential targets are screened from a list of major 3D printing companies, with 3D Systems selected due to its expertise in aerospace and industrial prototyping. An acquisition plan is outlined, proposing a friendly acquisition to improve 3D Systems' capabilities rather than extract economic value from its past R&D. Regulatory issues are not foreseen to be a barrier.

1. 2016
Group-02
Great Lakes Institute of Management
09-Jan-16
+
Research Project- Potential Takeover
Mergers and Acquisitions

2. Statement of Academic Integrity
We declare that all the material presented and submitted as part of this assignment is our
original work. For all the other material references and citations are mentioned.
We understand that plagiarism is the severest form of academic fraud. If any copying is
detected in this assignment, we bear the complete responsibility and the consequences that
might follow.
Group number: 02
Group Members:
Mahendar Singh B
Koganti Vineeth
Praveen K Reddy
Shuchi Saxena

3. Contents
Scope of Project......................................................................................................................................3
Introduction ............................................................................................................................................3
SpaceX.................................................................................................................................................3
Economic Setting: Space Exploration Industry .......................................................................................3
Industry overview ...............................................................................................................................3
Challenges in Future ...........................................................................................................................4
Strategic Solutions ..............................................................................................................................4
Strategic Logic for Acquisition of 3D printing technology firm...............................................................4
Searching and Screening.........................................................................................................................4
List of 3D printing companies .............................................................................................................5
Screening.............................................................................................................................................5
Acquisition Planning................................................................................................................................5
Form of Acquisition.............................................................................................................................5
Legal and Regulatory Issue..................................................................................................................6
Offer Price...........................................................................................................................................6
Form of Payment ................................................................................................................................6
Integration Plan...................................................................................................................................6
Conclusion...............................................................................................................................................6

4. Potential Take-over: 3DSystems by SpaceX
Scope of Project
The Scope of the Project is to study an organisation that is operating in a nascent industry and
explore various inorganic options to obtain competitive edge and for the growth of the Organisation.
SpaceX is an organisation operating in Space exploration industry which is chosen for the purpose of
this research study.
Introduction
SpaceX
SpaceX is a company that designs, manufactures and launches advanced rockets and Space crafts.
SpaceX was founded in 2002 by Elon Musk, an American entrepreneur, who had founded PayPal and
Tesla Motors. SpaceX was founded with an ultimate aim of enabling people to live in other Planets.
The Mission of SpaceX is “Colonizing Mars”. SpaceX is the only private organization authorized and
contracted by NASA to deliver pay load to International Space Station and launch satellites. SpaceX is
the first Organization to land a rocket used for launching orbital satellite.
Economic Setting: Space Exploration Industry
Industry overview
Space Exploration industry is a field of research industry that is primarily funded by Governments of
various nations. The industry was primarily funded by government as the major outcomes of this
industry were
 Expand our understanding of the universe
 Finding new sources of materials and energies
But as possibilities for profit creation through capturing new exotic resources and satellite launch
are becoming more viable, private players have also joined the Space Exploration industry. An
external environmental analysis for Space Exploration industry is given below:
Political reduces government expenditure
creates new jobs in the economy
strictly regulated
Economical
enhances new economic models
creates demand for high tech products
Social No Social opposition to private space exploration
Technology Technology landscape evolved
New technologies reducing model development time
Environment Reduces stress on the Earth's resources by giving us access to resources in
other planets

5. Challenges in Future
As the industry in its current phase of industry lifecycle is highly unpredictable and is highly
regulated by the Government policies the key source of competitive advantage for any company in
this industry is the agility and speed in new product development.
Also as SpaceX has a Mission to colonize Mars the challenges in meeting its mission adds to the
challenges of SpaceX that includes carrying resources and spares for 200 days space travel to Mars
and regular replacement of wear parts of the equipment in Mars colonies.
Thus the major challenges for SpaceX in the future are:
1. Agility in Product development
2. Transportation of materials for setting up Space colony
3. Manufacturing of parts in Space and Mars for replacement of spares
Strategic Solutions
1. Development of new cutting edge manufacturing processes and equipment to meet the
challenges
a. This strategy would take lot of resources and time but the industry structure
requires its players to be Agile
2. Partner with Cutting Edge Manufacturers
a. This strategy would require the strategic partner to increase investment in new
technologies to which the shareholders of the manufacturing company may be
averse
3. Acquisition of a Cutting Edge Manufacturer
a. This strategy would require large amount of financial resources and acquiring the
Technology improvement in-house would add to the risk of the organization.
Strategic Logic for Acquisition of 3D printing technology firm
Among the cutting edge manufacturing processes 3D printing is the only additive manufacturing
process where the material is added layer by layer to for the necessary part. This enables parts to
get manufactured from the powdered metal or plastic viable, other technologies require a
preformed blank from which the part is manufactured by material removal.
Thus 3D printing technology is less prone to creation of waste during manufacturing and the
powdered metal can be used for manufacturing of different parts. These characteristics make 3D
printing the best option for manufacturing in outer space and Mars.
Also because of the capability of 3D printing to manufacture intricate and convoluted parts cheaper
and faster than other technologies it can provide SpaceX with a capability of agile product
development that is essential to compete in this industry
Searching and Screening
Major companies in the 3D printing space were selected from various parts of the world and listed
below

6. List of 3D printing companies
Company Specialization Country
Stratasys Poly-jet printing, Industrial Prototype USA
3D Systems Industrial and Aerospace prototype USA
Materialise 3D printing Software Germany
Exone Industrial prototype Germany
Arcam Electron Beam melting Sweden
SLM Solutions Industrial Prototype Germany
Alphaform Rapid prototyping Germany
Voxeljet Industrial Prototype Germany
Organovo Organ printing and Pharma Prototype USA
Renishaw Industrial and Metrology Prototype UK
Screening
As we are in the process of acquisition of a 3D printing capability and not market share or new
Business Segment, the technological capabilities and cultural fit are the major filters for screening
the companies. An ideal target for SpaceX would be a US based 3D printing company that has
expertise in Industrial and Aerospace Prototyping. As per the above criteria the following companies
are selected:
 Stratasys
 3D Systems
The selected companies were further compared based on various parameters
2014 Stratasys 3D Systems
Revenue $ 750,129,000 $ 283,339,000
Net Income (loss) $ (119,420,000) $ 11,946,000
R&D expenditure $ 82,270,000 $ 75,395,000
Areas of Expertise Aerospace, Automobile,
Consumer electronics, Jewelry,
Dental, Consumer printing
Aerospace, High Precision
instrument, Dental, Defense
From the data above as well as from segment wise sales analysis Stratasys is found to have
businesses in multiple technologies in 3D printing catering to businesses as varied as Aerospace to
plastic-jet hobby printing. On the other hand, 3D Systems is a company focused on metal and
aerospace prototype printing.
Also the financials of 3D Systems are positive and hence can sustain its own operations. Based on
our analysis we propose 3D Systems as the target for acquisition for SpaceX
Acquisition Planning
Form of Acquisition
The management of 3D Systems has developed from a startup culture which is similar to the culture
of SpaceX. Also SpaceX aims to improve the capabilities of the 3D systems, not to reap economic
value of the previous R&D of the 3D Systems. Hence it is proposed to go for friendly acquisition deal.

7. Legal and Regulatory Issue
As far as researched, 3D Systems is not involved in any major legal litigation that could affect the
value of the company in the future. Also as the deal is a vertical integration in Technology industry
there are no regulatory issues that are foreseen.
Offer Price
Valuation of 3D Systems
2014 2015 2016 2017 2018
Net Operating cash flow 51,111,000 55,199,880 59,615,870 64,385,140 69,535,951
Terminal Value (4%) 899,559,524
51,111,000 55,199,880 59,615,870 64,385,140 969,095,476
Present value of future
earnings $ 730,586,841
Cash and cash equivalents $ 580,690,000 growth rate 8%
WACC 11.73%
Total Value $ 1,311,276,841
No of shares outstanding 112233000
Share value $ 11.68
Current Share price $ 8.38
The value per share is estimated at $ 11.68 based on the DCF as shown in the table above.
Form of Payment
As SpaceX is a privately held company, we cannot provide shares for as a currency for the
transaction. Hence the shares of 3D systems have to be purchased for cash. Hence the form of
payment is cash.
Integration Plan
3D Systems is proposed to be held as a 100% subsidiary of SpaceX and the operations of 3D systems
are proposed to be managed separately by present managers of 3D Systems. The Financial, R&D and
Strategic decisions of 3D systems are to be integrated into SpaceX. The cultural fit of the companies
is expected to be good as both the companies have a culture that fosters innovation.
Conclusion
Thus 3D system can be acquired to add competitive advantage for SpaceX over its competitors and
achieve its mission of Colonizing Mars.
As SpaceX is privately held as well as the 3D printing industry is not a traditional industry the data
availability was limited which has reduced the ability to analyze in depth about the selected
companies.