(Adds comment from spokesman for Canadian industry minister)
March 28 Sterigenics, a sterilization services
provider owned by private equity firm GTCR LLC, has reached a
deal to buy Canadian medical isotopes supplier Nordion Inc
for $727 million.
The offer of $11.75 per share represents a 12 percent
premium to Nordion's closing price on the New York Stock
Exchange on Thursday, the companies said.
"That's basically what our fair value was (for Nordion), so
we think they're getting a fair price," Morningstar analyst
David Krempa said.
Nordion's U.S.-listed stock trades at 8.3 times forward
earnings, a slight discount to the sector median of 11.4.
Nordion is one of the world's leading producers of
molybdenum-99, an isotope used in medical imaging, and the
company depends on raw material from an ageing Atomic Energy of
Canada Ltd (AECL) facility in Chalk River, Ontario.
A medical isotope is a radioactive substance used mainly to
The Canadian government said earlier on Friday it would
remove the 25-percent foreign investment cap on Nordion in cases
that are deemed to be of net benefit to Canada, under
legislation introduced on Friday.
Industry Minister James Moore would have to approve the
purchase for it to go forward. Asked if the minister would
consider its takeover to be of net benefit to Canada, Moore
spokesman Jake Enwright noted the government has a procedure for
dealing with such offers.
"Our government's balanced approach ensures that foreign
investment transactions are reviewed on their merits based on
the long-term interests of the Canadian economy," he said in an
Ottawa-based Nordion hired advisers Jefferies & Co in early
2013 to examine options for its future, and the sale to
Sterigenics would mark the completion of that review, said
Nordion Chief Executive Officer Steve West.
Deerfield, Illinois-based Sterigenics provides outsourced
contract sterilization services to the medical, pharmaceuticals,
food safety and other industries.
"Our focus is to ensure a stable long-term source of
Cobalt-60 that will maintain customer confidence in the future
availability and growth of gamma sterilization," said Michael
Mulhern, chief executive of Sterigenics.
Cobalt-60 emits high energy gamma rays that are used to
eliminate harmful organisms in a variety of products.
Upon closing of the deal, expected in the second half of
2014, Nordion will operate as a standalone company.
Stikeman Elliott LLP and Skadden, Arps, Slate, Meagher &
Flom LLP were Nordion's legal counsel. Gowling Lafleur Henderson
LLP and Kirkland & Ellis LLP were counsel to Sterigenics.
Nordion's shares have risen as much as 23 percent in the
last three months to Friday's close of $10.41 on the New York
(Reporting by Sneha Banerjee in Bangalore, Rod Nickel in
Winnipeg and Randall Palmer in Ottawa and Jeffrey Hodgson in
Toronto; Editing by Don Sebastian, Maju Samuel and Lisa