Colfax (NYSE:CFX) shares took a hit today after the industrial giant offered $3.15 billion to acquire orthopedics company DJO Global and said it plans to sell off its air & gas handling business.

Vista, Calif.-based DJO, which is owned by a private equity consortium headed up by Blackstone, last week posted losses of -$29.5 million on sales of $294.1 million for the three months ended Sept. 29, marking a red ink expansion of 30.0% on sales growth of 1.1% compared with Q3 2017.

“The acquisition of DJO is a compelling next step in the strategic evolution of Colfax that creates a new growth platform in the high-margin orthopedic solutions market,” president & CEO Matt Trerotola said in prepared remarks. “As a clear market leader in bracing and rehabilitation systems – with a track record of innovative new products, globally recognized brands, and a diverse product portfolio – DJO is well-positioned to benefit from secular trends driven by changing demographics and increased preventive healthcare. This transaction reflects our strategic intent to diversify our portfolio and end-market exposure, reduce cyclicality, and increase profitability. We see significant opportunities to apply our proven Colfax business system across DJO to create a continuous improvement culture, further improve productivity and margins, and accelerate innovation and new product development.

“We are committed to reducing leverage and restoring balance sheet flexibility near-term and will explore strategic options for our air & gas handling business. Longer-term, we see tremendous opportunities to build our new medical technology platform with additional investment. We are excited to welcome DJO’s strong management team and talented associates to the Colfax family,” Trerotola said.

“Joining Colfax is a win for our customers, and all DJO stakeholders,” added DJO president & CEO Brady Shirley, who will lead the DJO business after the deal closes, expected during the first quarter next year. “Colfax has the financial strength, experience, and proven business system to support our operational performance and growth. Importantly, they are committed to our mission to get and keep people moving, and we are confident that the Colfax team’s operating expertise across a broad array of businesses makes them the ideal partner to help us build on our momentum, drive new levels of innovation, and continue to deliver outstanding service to our customers.”

Colfax said it expects the deal to add to its adjusted EPS in the first full year after closing, plus tax benefits from DJO’s roughly $800 million in net operating loss carry-forwards.

J.P Morgan is financial advisor to COlfax, with Kirkland & Ellis as legal advisor; Goldman, Sachs, Credit Suisse, and Wells Fargo Securities are financial advisors to DJO, with Simpson Thacher & Bartlett as legal advisor.

Colfax co-founders, brothers Steven and Mitchell Rales, also built Danaher (NYSE:DHR), where Trerotola worked before joining Colfax, according to Reuters.

Wall Street reacted negatively to the news, sending CFX shares down -14.8% to $23.84 apiece today in mid-afternoon trading.

“It’s a completely new market for the firm, outside of the industrial market. Also, the strategic review of the non-welding business was unexpected,” Northcoast Research analyst Tom Hayes told the wire service.