Business Context and Reporting Period
This Form 8-K was filed by Colfax Corporation (not Enovis Corp) on November 19, 2018. The filing announces the entry into a definitive Agreement and Plan of Merger to acquire DJO Global, Inc. from private equity funds managed by The Blackstone Group L.P.
Key Financial Metrics and Transaction Structure
- Transaction Value: Approximately $3.15 billion in cash, subject to adjustments.
- Financing Plan:
- ~$100 million from existing cash on balance sheet.
- Proceeds from credit facilities and a contemplated debt offering.
- $500 million to $700 million from a contemplated offering of equity or equity-linked securities.
- Bridge Financing: A commitment letter secured $3.29 billion in bridge financing from J.P. Morgan Chase Bank, N.A., Credit Suisse AG, and Credit Suisse Loan Funding LLC.
- Existing Debt Replacement: Commitments of $1.8 billion to replace the existing Credit Agreement, contingent on specific amendments.
- Termination Fee: Colfax will pay DJO $220.5 million if DJO terminates the agreement under specific conditions.
Material Changes and Outlook
The primary material change is the initiation of a major acquisition expected to close in the first quarter of 2019, subject to customary closing conditions.
- Conditions to Closing: Receipt of regulatory approvals, compliance with covenants, absence of a "Material Adverse Effect" on DJO, and accuracy of representations.
- Management Commentary: The transaction is approved by the Board of Directors. The filing includes a press release and investor presentation (Exhibits 99.1 and 99.2) which are not deemed "filed" for liability purposes.
- Risks and Contingencies: Risks include the ability to complete the transaction on anticipated terms, access to financing on reasonable terms, and the impact on the combined company's future financial condition, indebtedness, and operations.
Investor Verification Checklist
- Verify the final closing date and whether the transaction closes in Q1 2019 as expected.
- Confirm the final terms of the equity or equity-linked securities offering ($500M-$700M range).
- Monitor the status of regulatory approvals required for the transaction.
- Review the full text of the Merger Agreement (Exhibit 2.1) and Commitment Letter (Exhibit 2.2) for specific covenants and conditions.
- Assess the impact of the $3.15 billion acquisition on Colfax's leverage ratios and liquidity post-closing.