Colfax (NYSE:CFX) plans to split into two publicly traded companies early next year — with businesses including DJO forming a new stand-alone orthopedic device company.
The split — announced yesterday — will create a to-be-named medical device company headquartered in Wilmington, Del., with a significant presence in Dallas. Present Colfax CEO Matt Trerotol will lead the medtech business, with Colfax EVP Brady Shirley serving as COO. Present Colfax EVP Shyam Kambeyanda will lead the other company — called ESAB — focusing on fabrication technology and operating out of Colfax’s present Annapolis Junction, Md. headquarters.
Colfax’s Medical Technology operating segment is expected to bring in $1.4 billion this year. When it becomes a stand-alone company in Q1 2022, it will likely be either the sixth or seventh largest orthopedic device company in the world. Its ranking will depend on the size of Zimmer Biomet’s planned spine and dental business spinoff, also expected to complete next year.
“This is an exciting day for Colfax and an important step to unlock the full value inherent in our MedTech and FabTech businesses,” Trerotola said in a news release. “Now is the right time to build on the momentum in both businesses and enable each to better capitalize on its distinct opportunities. … 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.”
The announcement of the planned split comes two years after Colfax completed its $3.15 billion purchase of DJO. The business further expanded after Stryker last year sold its total ankle replacements and finger joint implants businesses to Colfax/DJO to appease antitrust regulators as part of Stryker’s merger with Wright Medical. Colfax’s medical device business has engaged in other bolt-on acquisitions, such as the purchase of orthopedic foot and ankle implant maker Trilliant Surgical early this year.
Colfax spoke in its news release of new strategic M&A and R&D investments in the future for the new stand-alone medical device company.