Industrial equipment maker Colfax Corp said on Thursday it would separate its industrial and medical devices businesses into two publicly traded companies following a strategic review of its operations.
Colfax said it had not yet determined the form in which the separation would be executed, but expects it to be tax-free to its shareholders.
The company, with a market cap of $5.36 billion according to Refinitiv IBES data, has two business segments – DJO, which is the medical devices unit, and ESAB, which produces welding and cutting equipment as well as consumables.
Colfax said that since both businesses operate in distinct markets with different business opportunities, a separation would bring in material benefits to the standalone companies.
“We believe a separation will better position each business to execute tailored strategies to deliver above-market growth,” said Colfax Chief Executive Officer Matt Trerotola.
Colfax aims to complete the separation by the first quarter of 2022, with Trerotola set to head the medical technology business.
DJO, which Colfax acquired in 2019, sells medical devices for joint reconstruction, vascular health and pain management and brought in sales of $309.5 million in the fourth quarter.
The new medtech company will take in Colfax’s current medical technology, which is expected to generate revenue of approximately $1.4 billion in 2021.
The fabrication technology arm posted sales of $518.6 million.
Executive Vice President Shyam Kambeyanda will lead the fabrication technology company, which will remain headquartered in Maryland and continue to operate under its well-known brand name, ESAB.
Source: Reuters.com