MDS to sell business units
Canadian life sciences company MDS Inc. says it’s going to sell off most of its major divisions and focus on its troubled Nordion medical isotope business.
MDS chief executive Stephen DeFalco says the ongoing shutdown of the government-owned nuclear reactor in Chalk River, Ont., has caused significant challenges to Nordion.
He says Nordion’s troubles resulted in the decision to split up the company in order to recognize the value of the other parts of its business.
The Toronto-based company said Wednesday that it has arranged the sale of its Analytical Technologies business for $650 million to Danaher Corp.(NYSE: DHR). MDS intends to return $400 million to $450 million of that to shareholders.
MDS Analytical has about 1,100 employees operating in 10 countries.
It also has a 50 per cent share of the Applied Biosystems/MDS Sciex joint venture, also known as AB Sciex, which designs and manufactures sophisticated instruments used by researchers and clinicians.
In a separate but related transaction, Danaher announced it has agreed to buy the other half of the joint venture from Life Technologies Corp. (Nasdaq: LIFE). That will bring the total paid by Danaher to the two sellers to US$1.1 billion.
MDS also said Wednesday it intends sell its MDS Pharma Services business, which helps other companies discover and develop new drugs.
MDS said it is "actively seeking a buyer" for its MDS Pharma but if an acceptable transaction can’t be completed it will continue to own the business.
"During this process, our MDS Pharma Services and MDS Analytical Technologies businesses will remain focused on delivering exceptional service to customers. MDS Nordion will remain focused on innovation and on building its market leadership in the provision of medical isotopes for molecular and diagnostic imaging, radiotherapeutics and sterilization technologies," DeFalco said.
MDS also said Wednesday that its third-quarter results were hurt by further softening in customer demand for some of its services and by the extended downtime at Atomic Energy of Canada Ltd.’s NRU reactor, which was the major source for medical isotopes sold by Nordion.
For the third quarter of 2009, MDS expects to report net revenues in the range of $190 million to $195 million and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) in the range of $5 million to $10 million from continuing operations.
For its part, Washington, D.C.-based Danaher announced separately on Wednesday that its 2009 restructuring activities will rise to between US$225 million and US$250 million – up from US$150 million to US$170 million.
Danaher said the restructuring will eliminate about 3,300 positions and 30 facilities, resulting in annual cost reductions of about $200 million.