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Colfax Corp. announces a surprise move!

November 26th, 2018

Colfax Corp. (NYSW:CFX) the industrial gas and fluid handling company made a surprise move:

They announced the acquisition of the orthopedic devices, software and services company DJO Global!

.. oops… a total different activity and the price to pay in cash to the seller Blackstone is $ 3.15billion! In order to finance this acquisition Colfax intents to sell its entire Air and Gas Handling Division which at the end means a complete change of their business model.

Investors are nervous and the stock fell 16% after the announcement last week.

Will this all work and create shareholder value over time?

For the moment impossible to tell and therefore the stock remains a „hold“ but this change of activity is not just a „crazy idea“: the Rales brothers who founded Colfax modelled the company after Danaher Corp. (NYSE:DHR) which works in the orthopedic sector for years with success. Also Colfax CEO Trerotola came to Colfax from Danaher.

So perhaps with their experience in the medical device sector it could work over time!

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