Colfax acquires DJO Global
Deal value: $3.15 billion
Announced: November 19, 2018
Closed: February 25, 2019
Colfax’s $3.15 billion purchase of DJO Global bought the industrial equipment provider into the orthopedic market—with the latter’s devices, software and services spanning the acute care and rehabilitation settings in multiple international markets.
In addition to its 5,000 employees across 18 global locations, DJO’s portfolio includes a wide range of braces—such as the near-ubiquitous Aircast and walking boots—as well as surgical implants for hip, knee and shoulder reconstruction.
It also offers several products used during recovery, including devices for measuring hand and pinch strength, and muscle electrodes. Altogether, DJO’s hundreds of products bring in about $1.2 billion in annual revenue.
However—in the months leading up to the deal’s announcement—DJO had posted a net loss of $29.5 million in the third quarter of 2018.
Despite a restructuring plan launched in early 2017, those losses were higher than the $22.7 million reported for the same period the year before.
At the time, DJO President and CEO Brady Shirley described the deal as a win for the devicemaker’s customers and stakeholders. “Colfax has the financial strength, experience, and proven business system to support our operational performance and growth,” Shirley said, pointing to the company’s past work across a “broad array of businesses.”
It would also be a big step in the evolution of Colfax’s business model, according to the company’s president and CEO, Matt Trerotola. Purchased from a group of private equity fund investors managed by Blackstone, Trerotola described the acquisition of DJO as an opportunity to build a new growth platform in an expanding, high-margin medical market.
As part of the deal, Colfax—which also manufacturers equipment and metals for industrial welding and cutting under its ESAB brand, for applications in construction, shipbuilding and the like—also announced plans to sell off its air and gas handling business, to add some flexibility back onto its balance sheet.
It made good on the promise not long after closing the deal with DJO, in a $1.8 billion trade with KPS Capital Partners.
“This transaction will position us to achieve our leverage target and pursue strategic bolt-on acquisitions in our Medical Technology and Fabrication Technology segments,” Trerotola said, marking the completion of the company’s shift in portfolio.