Isotope supplier Nordion to go private in $727 million deal

Isotope supplier Nordion to go private in $727 million deal

Fri, Mar 28 2014

(Reuters) – Sterigenics, a sterilization services provider owned by private equity firm GTCR LLC, has reached a deal to buy Canadian medical isotopes supplier Nordion Inc (NDN.TO: QuoteProfileResearchStock Buzz) (NDZ.N: QuoteProfileResearchStock Buzz) 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 diagnose illness.

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 e-mail.

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 Stock Exchange.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: