After paying $3B to enter orthopedics, Colfax now plans to split itself in two

After absorbing orthopedics-focused DJO Global through one of the sector’s largest M&A deals of 2019, Colfax Corporation now plans to split itself in two.

Set for early next year, the division will spawn a new, to-be-named and publicly traded medtech company made up of DJO’s portfolio—which spans musculoskeletal health, joint reconstruction, vascular health and pain management—and is slated to bring in about $1.4 billion in revenue by the end of this year.

Its future sibling will consist of Colfax’s ESAB brand, with welding and cutting products for construction, shipbuilding and other industrial applications.

“Now is the right time to build on the momentum in both businesses and enable each to better capitalize on its distinct opportunities,” said Colfax President and CEO Matt Trerotola, who will help lead the medtech company, with Executive Vice President Brady Shirley serving as chief operating officer.

“We believe a separation will better position each business to execute tailored strategies to deliver above-market growth, margin expansion and strong, consistent free cash flow,” Trerotola added.

Colfax closed a $3.15 billion deal for DJO Global in early 2019, with the company’s near-ubiquitous Aircast and walking boots for sprains—as well as surgical implants for hip, knee and shoulder reconstructions—giving the company a major foothold in the market.

Since then, DJO has completed several bolt-on acquisitions of its own, including in extremity reconstruction, foot and ankle implants and therapeutic laser technology. 

It picked up Stryker’s total ankle and finger arthroplasty lines last November as well as LiteCure and its laser therapies in December. In January, it followed up with orthopedic implant maker Trilliant Surgical. And the company said it expects its M&A appetite to continue, with capital deployment to be focused on its strategic growth program.