Acquisition

On February 22, 2019, Colfax completed the purchase of DJO Global, Inc. (“DJO”, “DJO Acquisition”) pursuant to the previously disclosed Agreement and Plan of Merger (the “Merger Agreement”), dated November 19, 2018. Colfax paid an aggregate net purchase price of $3.15 billion, subject to certain adjustments set forth in the Merger Agreement (the “Purchase Price”). See Note 8, “Equity” and Note 11, “Debt” for a discussion of the respective financing components of the DJO Acquisition.

DJO is a global leader in orthopedic solutions, providing orthopedic devices, reconstructive implants, software and services spanning the full continuum of patient care, from injury prevention to rehabilitation. DJO has approximately 5,000 employees across 18 locations around the world. The acquisition is expected to evolve the Company to higher margins, faster growth, and lower cyclicality, while providing opportunities for significant bolt-on and adjacent acquisitions over time. The value included as Goodwill for this acquisition is reflective of these expected benefits in conjunction with anticipated synergies as the Company uses Colfax Business System (“CBS”) to drive further operating improvement, margin expansion, and long-term growth. CBS is the Company’s business management system, combining a comprehensive set of tools and repeatable, teachable processes, that the Company uses to create superior value for its customers, shareholders and associates.

During the three months ended March 29, 2019, the Company incurred $53.3 million of advisory, legal, audit, valuation and other professional service fees in connection with the DJO Acquisition, which are included in Selling, general and administrative expense in the Condensed Consolidated Statement of Operations. As of March 29, 2019,$0.7 million related to these expenses were included in Accrued liabilities in the Condensed Consolidated Balance Sheet.

The DJO Acquisition was accounted for using the acquisition method of accounting and accordingly, the Condensed Consolidated Financial Statements include the financial position and results of operations from the date of acquisition. The following unaudited proforma financial information presents Colfax’s consolidated financial information assuming the acquisition had taken place on January 1, 2018. These amounts are presented in accordance with GAAP, consistent with the Company’s accounting policies.



	Three Months Ended
	March 29, 2019			March 30, 2018
	(Unaudited, in thousands)
Net sales	$	1,176,834		$	1,173,554
Net income (loss) attributable to Colfax Corporation	(10,478		)	(6,894		)

The following table summarizes the Company’s best initial estimate of the aggregate fair value of the assets acquired and liabilities assumed at the date of acquisition. These amounts, including inventories, deferred taxes, intangible assets, useful lives of the intangible assets, and property, plant and equipment, are determined based upon certain valuations and studies that have yet to be finalized. Accordingly, the assets acquired and liabilities assumed, as detailed below, are subject to adjustment once the detailed analyses are completed, which could be material. Substantially all of the Goodwill recognized is not expected to be deductible for income tax purposes.



	February 22, 2019
	(In thousands)
Trade receivables	$	160,967
Inventories	211,991
Property, plant and equipment	171,500
Goodwill	1,245,612
Intangible assets	1,864,000
Accounts payable	(107,144		)
Other assets and liabilities, net	(399,907		)
Total	3,147,019
Less: net assets attributable to noncontrolling interest	(1,862		)
Consideration, net of cash acquired	$	3,145,157

The following table summarizes preliminary Intangible assets acquired, excluding Goodwill, as of February 22, 2019:



	Intangible Asset (In thousands)		Weighted-Average Amortization Period (Years)

Trademarks	$	606,000	Indefinite
Customer relationships	954,000		14
Acquired technology	304,000		12
Intangible assets	$	1,864,000