Colfax Corporation to Acquire DJO Global

ANNAPOLIS JUNCTION, Md. (November 19, 2018)—Colfax Corporation, a diversified technology company, announced that it has entered into a definitive agreement to acquire DJO Global Inc. (DJO) from private equity funds managed by Blackstone for $3.15 billion in cash. DJO is a provider of orthopedic solutions, software and services spanning the full continuum of patient care, from injury prevention to rehabilitation.

“The acquisition of DJO is a compelling next step in the strategic evolution of Colfax that creates a new growth platform in the high-margin orthopedic solutions market,” said Matt Trerotola, president and chief executive officer of Colfax, via press release.
“DJO is well-positioned to benefit from secular trends driven by changing demographics and increased preventive health care. This transaction reflects our strategic intent to diversify our portfolio and end-market exposure, reduce cyclicality and increase profitability. We see significant opportunities to apply our proven Colfax Business System across DJO to create a continuous improvement culture, further improve productivity and margins, and accelerate innovation and new product development.”

“Colfax has the financial strength, experience and proven business system to support our operational performance and growth. Importantly, they are committed to our mission to get and keep people moving, and we are confident that the Colfax team’s operating expertise across a broad array of businesses makes them the ideal partner to help us build on our momentum, drive new levels of innovation and continue to deliver outstanding service to our customers,” said DJO President and CEO Brady Shirley.

Upon closing of the transaction, DJO Global will operate as a new segment within Colfax and be led by Shirley, who will report directly to Trerotola.

DJO provides a broad range of orthopedic care solutions including bracing, reconstructive implants, rehabilitation devices, software and services. Headquartered in Vista, California, DJO has approximately 5,000 employees across 18 locations around the world. DJO’s revenue was $1.2 billion, and adjusted EBITDA was $269 million for the twelve-month period ending September 2018.

The Colfax DJO Global transaction, which is expected to close in the first quarter of 2019, is expected to deliver adjusted EPS accretion in the first full year after closing. In addition, Colfax expects to realize future tax benefits from DJO’s approximately $800 million of net operating loss carryforwards.

Colfax expects to finance the transaction with approximately $100 million of cash from its balance sheet, proceeds from credit facilities and a contemplated debt offering, and $500 million to $700 million from a contemplated offering of equity or equity-linked securities, according to a press release.

J.P. Morgan and Credit Suisse have committed to provide bridge financing for the transaction. Colfax expects to maintain its existing debt ratings and will prioritize deleveraging to reduce its net leverage ratio to the mid-3x range by the end of calendar 2019. In connection with its deleveraging plans, Colfax is evaluating strategic options for its air and gas handling business. Colfax does not intend to undertake any material acquisitions or share repurchases until its leverage metrics return to targeted levels.

The acquisition is subject to customary closing conditions, including receipt of applicable regulatory approvals.

J.P. Morgan is serving as financial advisor and Kirkland & Ellis is serving as legal advisor to Colfax. Goldman, Sachs & Co. LLC, Credit Suisse, and Wells Fargo Securities LLC are serving as financial advisors and Simpson Thacher & Bartlett LLP is serving as legal advisor to DJO.

Visit colfaxcorp.com and djoglobal.com for more information.