3D sale: Xaar has conditionally agreed the terms of the accelerated sale of its remaining 55% stake in Xaar 3D to Stratasys. The deal is more complex than the original $33m flat fee plus up to $10m in royalties. The new deal spreads the cash payments out over multiple years and if all paid could total $33.8m (or c. £24m) over 15 years. We had assumed a revised one-off payment of £18m in 2H21E. Cash timing: There is an initial cash payment of $12.8m on exercise of the revised call option. A further $4.6m is payable in three instalments subject to Xaar 3D hitting revenue milestone (we assume broadly equal payment in FY23-25E). A cap on the royalty payments has increased from $10m to $16.4m and over an extended 15 years (rather than the original 10 years).The royalty rate has increased from 2% to 3% of gross revenue of Xaar 3D related products. Forecasts: There is no P&L impact from this new agreement. From a cashflow perspective, we assume the $12.8m (or c. £9.5m) is paid in 2H21E, then £1m in FY23E and FY24E, plus £1.4m in FY25E. The remaining potential cash payments are beyond our forecasting period. Removes a distraction: Xaar management have spent a lot of time this year on getting this deal over the final hurdle. They can now double down their focus on the organic investment opportunities and further M&A. Cautious outlook: As we highlighted in our note Irix-istible self-help’ on 14 September, there are near-term challenges from increased Asian Covid-19 disruption that held back a more positive view on 2H21. Recent news flow on the important Chinese construction market (for ceramic tiles) and power shortages have not diminished these concerns. Beyond the next 12 months, the medium-term opportunity from delivery of the 5-year strategy remains significant and firmly in place. Our TP remains at 280p and we reiterate our Buy.