3D Systems and Xerox have announced a transaction designed to leverage both companies' 3D printing capabilities to accelerate growth and cement leadership positions. 3D Systems entered into a definitive agreement to acquire Xerox Corporation's Wilsonville, Oregon product design, engineering and chemistry group and related assets for $32.5 million in cash. Both companies expect the transaction to close before the end of 2013, subject to fulfillment of certain customary conditions. This agreement expands the decade and a half long collaboration between the companies, that already produced 3DS' best selling ProJet series 3D printers.

"We are pleased to expand our relationship with an innovative partner of the caliber of Xerox and expect that acquiring some of the Xerox Wilsonville engineering team, together with their state-of the-art development labs and selected licensed IP, will catapult our 3D printers' development and manufacturing capabilities forward," said Avi Reichental, 3D Systems' President and CEO. "This bold step is consistent with our belief that we must act quickly and decisively to extend and cement our marketplace leadership position by taking full advantage of the window of unprecedented opportunity in front of us."

"This deal takes advantage of Xerox's world-class capabilities and expands our relationship with 3D Systems in the exciting and dynamic 3D printing industry," said Kevin Warren, President of Xerox Strategic Growth Initiatives. "It emphasizes how we are leveraging our expertise while we continue to evolve our business model and pursue strategic growth opportunities."

As part of this agreement, 3DS expects to add more than 100 experienced Xerox engineers and contractors specializing in product design and materials science to its global R&D team and immediately begin to operate its own facility within the Xerox Wilsonville campus. Xerox will maintain ink and print head development resources along with research relevant for digital printing and the 3D markets. In connection with this strategic investment, 3DS expects to progressively increase its annual R&D expenditures by approximately 75% to 100% over the next few years as it completes certain Xerox related engineering services commitments and fully leverages its expanded capabilities.

"The stronger our marketplace leadership, the more powerful our economic model becomes," continued Reichental. "Simply put, a solidified position translates directly to higher revenue, higher profitability and greater earnings power over time, and we are willing to sacrifice short term earnings to get there faster."