Shareholders of Canadian medical isotope maker Nordion Inc. have approved the sale of the company to U.S. firm Sterigenics International Inc.
At a special meeting held in Ottawa on Friday, 76.4 per cent of shareholders voted in favour of the deal, which will see Sterigenics pay $13 (U.S.) per share in cash, or about $805-million, for all Nordion shares. Two-thirds support from shareholders was necessary for the sale to go through.
When the sale is complete Nordion will be delisted from the TSX and Nasdaq, although it will remain a separate entity and keep its name. The deal still needs Investment Canada approval, and royal assent of a federal budget bill that changed the foreign-ownership restrictions governing Nordion.
Nordion chairman William Anderson told the meeting that he expects those conditions will be met and that the sale will close some time before the end of 2014.
Sterigenics, based in Illinois, specializes in sterilization services for medical device makers, as well as pharmaceutical and food companies.
Sterigenics initially bid $11.75 for each Nordion share in March. But a third party – which Nordion never identified – came in with a higher offer early in May, prompting Sterigenics to boost its offer to $12.25. The other company made another bid at $12.50, just before a shareholder vote was initially set to take place on May 27, and again Sterigenics boosted its offer, to $13.
Nordion was created almost seven decades ago as the radium sales department of Eldorado Mining and Refining Ltd. It took over the sale of radioisotopes from the nuclear research facility at Chalk River, Ont., before becoming part of Atomic Energy of Canada Ltd. in the 1950s.
It was part of MDS Health Group for two decades before being spun off as a standalone public company in 2010.
Nordion currently has two core businesses: selling systems that use radiation to sterilize medical devices and foods, and the processing of medical isotopes for the diagnosis and treatment of diseases.
Until 2012, Nordion was a dividend play for investors with a yield of around 4 per cent. Everything changed in September, 2012, however, when the company lost a crucial arbitration case against AECL, which still supplies it with isotopes.
The arbitrator ruled that Nordion deserved no compensation for the 2008 shutdown of AECL’s program to develop a new nuclear reactor called Maple, which was supposed to replace its aging reactor. Nordion had invested $350-million in the project, and was asking for $1.6-billion in compensation. After losing the case, Nordion cancelled its dividend, and the stock plunged by more than one-third. It has not paid a dividend since then.
After that the company cleaned up many of its legal issues – including settling its disputes with AECL. It also sold off its smallest unit, the “targeted therapies” division that sold radiation-based treatments, for $200-million (U.S.). Then, following a strategic review, it found a buyer for the rest of the company.