Shares of iconic Canadian medical isotope maker Nordion Inc. jumped Friday after the proposed takeover of the firm by an American company passed two key hurdles.
Nordion is in the process of selling itself for about $800-million to Sterigenics International Inc., an Illinois-based company that specializes in sterilization services for medical device makers, as well as pharmaceutical and food companies.
Nordion stock rose more than 4 per cent on the TSX after the company said it had received a “no action” letter from the Competition Bureau in Ottawa, and that the U.S. Federal Trade Commission had ended the waiting period under antitrust legislation.
That means that Canada’s competition watchdog does not intend to challenge the sale, and the U.S. government sees no problem with it either.
Nordion’s stock price had slipped in recent weeks below the $13 (U.S) Sterigenics has agreed to pay for the shares. It is now trading at roughly the takeover price, indicating that investors are now more comfortable that the deal will go through without problems.
In early June, Nordion shareholders voted 76.4 per cent in favour of the deal. Two-thirds support was necessary for the sale to go through. Later that month, the federal government enacted legislation that relaxed foreign ownership restrictions on Nordion, allowing it to be sold to a foreign owner.
But the string of conditions is not yet complete. The deal still needs approval under the Investment Canada Act. The company hopes everything will be in place well before the end of the year.
Nordion was created almost seven decades ago as the radium sales department of Eldorado Mining and Refining Ltd. It took over the sale of radio isotopes 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.