Colfax Announces Intention to Separate Into Two Independent Public Companies
- Will Create Focused Specialty Medical Technology and Fabrication Technology Companies
- Separation Will Accelerate Strategic Momentum and Unlock Significant Value Creation Potential
- Company Intends Tax-Free Separation to be Completed in the First Quarter of 2022
“This is an exciting day for Colfax and an important step to unlock the full value inherent in our MedTech and FabTech businesses,” said
“This decision is the result of a thorough strategic review undertaken by the Board with management, reflecting an ongoing commitment to drive long-term value for all stakeholders,” said
The specialty medical technology company will be led by Colfax CEO
The fabrication technology company will be led by current Colfax EVP Shyam Kambeyanda, who will join the FabTech Board. Long-time Colfax financial executive and current ESAB business CFO
Compelling Strategic Rationale for a Separation
The businesses operate in distinct markets, with unique business opportunities and investment requirements. The Colfax Board, with management, believes the separation will result in material benefits to the standalone companies, including:
- Sharpened strategic focus for independent specialty medical technology and fabrication technology companies.
- Increased operating flexibility and resources to capitalize on growth opportunities in their respective markets.
- Capital structures and capital allocation strategies that are tailored to each company’s growth strategy.
- Improved investor alignment with each company’s clear value proposition, and ability for investors to value the two companies based on their distinct strategic, operational and financial characteristics.
Two Highly Focused Market-Leading Companies
The MedTech company is a leading, specialty medical technology growth company. It has top-tier positions in attractive orthopedic segments across the continuum of care, including surgical implants as well as injury prevention and recovery devices, with clear paths to further accelerate growth. The company recently completed several strategic bolt-on acquisitions, strengthening and expanding its position in attractive market segments including extremities reconstruction and therapeutic laser technology for recovery. The company will be comprised of Colfax’s current Medical Technology operating segment, which is expected to generate revenue of approximately
The separation is expected to enable MedTechCo to continue to expand its share in high-growth, high-margin served and adjacent markets through strategic M&A and R&D investments. This will position the company with significant opportunities to deliver above-market growth, margin improvement and increased cash flow. Capital deployment is expected to be focused on supporting the company’s strategic growth program.
ESAB is a fabrication technology leader with an unparalleled global footprint, track record of industry-leading product innovation and strong positions in attractive emerging markets. The company has successfully executed its operational improvement strategy to out-grow peers in recent years and significantly increase margins and cash flow. Through strategic bolt-on acquisitions, ESAB has broadened its product and technology offering, extended its geographic reach and expanded into attractive new segments, including gas control for medical and life sciences. ESAB will be comprised of Colfax’ Fabrication Technology operating segment, which is expected to generate revenue of approximately
The separation is expected to support ESAB’s leadership in global industrial markets and position it to further increase market share through innovation and commercial excellence. ESAB will focus on complementing its growth with operating improvements to further enhance margins and cash flow. It expects to maintain a balanced capital allocation policy focused on growth investments, bolt-on acquisitions, and return of capital to shareholders.
Colfax intends the separation to be tax-free to Colfax’ shareholders. Colfax is targeting completion of the separation in the first quarter of 2022. Completion of the separation is subject to, among other things, completion of financing and other transactions on satisfactory terms, other steps necessary to qualify the separation as a tax-free transaction, receipt of other regulatory approvals and final approval from the Colfax Board of Directors. Details of the separation will be included in future filings with the
Conference Call and Investor Presentation Today
Colfax will hold a conference call to discuss this announcement beginning at
Investor Day Scheduled for
As previously announced, Colfax will host an investor day on
Cautionary Note Concerning Forward Looking Statements
This press release includes “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be characterized by terms such as “believe,” “anticipate,” “should,” “would,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” “targets,” “aims,” “seeks,” “sees” and similar expressions. All statements other than statements of historical fact could be deemed forward-looking statements, including, but not limited to, statements regarding: the intended separation of the ESAB and MedTech businesses; expected 2021 revenue for ESAB and MedTech; the timing and method of the separation; the anticipated benefits of the separation; the expected financial and operating performance of, and future opportunities for, each company following the separation; the tax treatment of the transaction; and the leadership of each company following the separation. These statements are based on assumptions and assessments made by our management as of the date of this press release in light of their experience and perception of historical trends, current conditions, expected future developments and other factors believed to be appropriate. Forward-looking statements are subject to a number of risks, uncertainties and assumptions that might cause actual results, developments and business decisions to differ materially from those expressed or implied thereby, and are not guarantees of future performance or actual results. These factors include, among other things: the final approval of the separation by our board of directors; the uncertainty of obtaining regulatory approvals in connection with the separation, including rulings from the
The factors identified above are not exhaustive. We operate in a dynamic business environment in which new risks may emerge frequently. Other unknown or unpredictable factors could also cause actual results, developments and business decisions to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements should be construed in the light of such factors. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. Additional information regarding these and other factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements is set forth in our public filings with the
Vice President, Finance
Source: Colfax Corporation