Nordion Inc. (TSX:NDN) (NYSE:NDZ) today provided an update
regarding its Sterilization Technologies business and clarifying
information in response to shareholder inquiries with respect to
the status of the proposed acquisition and the deadline for
submitting proxies.
The proposed acquisition by Sterigenics of all the issued and
outstanding common shares of Nordion, for a cash consideration of
US$12.25 (the “Arrangement”), has unanimous support of the Board of
Directors (the “Board”). In addition, the two leading proxy
research and advisory firms, Institutional Shareholder
Services Inc. and Glass Lewis & Co., have each issued a
report recommending its clients vote FOR the transaction.
The Company continues to believe it is important that
shareholders be well informed when considering their voting
decision. This update also provides further business clarity and
transaction information, and reiterates the following important
considerations for shareholders:
- the reasons for the Board’s unanimous
recommendation to vote FOR the Arrangement;
- the Company’s view of the Cobalt-60
market and the emergence of an additional supplier;
- the Company’s view of the Medical
Isotope business and the continued lack of an alternative supply of
reactor-based medical isotopes beyond 2016;
- the fact that no new or alternative
acquisition proposal has been received or offered to the
Company;
- the Company’s and Board’s views of the
potential negative impact of the Arrangement not being approved by
shareholders.
Recommendation to Vote FOR the Arrangement
Nordion’s Board of Directors has unanimously determined that the
Arrangement is in the best interests of Nordion and its
shareholders on the basis that, among other factors:
- the Arrangement is the best alternative
resulting from an active and extensive strategic review process
that was publicly announced on January 28, 2013;
- the Consideration of US$12.25 per share
in cash, which increased from an initial consideration of US$11.75
per share, constitutes the highest offer received in connection
with the strategic review process;
- the Consideration represents certainty
of value for shareholders and a significant premium of
approximately 29% over the 90-day volume weighted average price of
US$9.47 per Common Share on the NYSE as at March 27, 2014 and a
premium of approximately 92% to the closing price of US$6.39 per
Common Share on the NYSE on January 25, 2013, the last trading day
immediately before the announcement of the strategic review
process;
- adjusting for the Company’s fiscal Q1
2014 reported cash and cash equivalents balance ofUS$319.5 million
or US$5.16 per share, the cash adjusted premium to the 90-day
volume weighted average price on the NYSE as at March 27, 2014 is
approximately 64%;
- the Arrangement Agreement allows the
Company to respond to superior proposals up to the time of
shareholder approval; and
- the Arrangement is not subject to any
financing condition.
Shareholders are reminded that votes must be received by
Nordion’s transfer agent, CST Trust Company, no later than
5:00 p.m. (Eastern Time) on May 23, 2014.
Emergence of an Alternative Cobalt-60 Supplier and its
Potential Impact on the
Sterilization Technologies Business
On April 24, 2014, the Company updated its Fiscal 2014 outlook
to reflect that it expected the Sterilization Technologies revenues
in Fiscal 2014 to increase by approximately 35% to 40%, compared
with a 10% to 15% expected increase announced on March 6, 2014. The
announcement of a revised outlook was made after the Company became
aware that the increased Cobalt-60 (“Co-60”) requests for shipments
were likely the result of another Co-60 supplier discontinuing its
supply. As indicated in the Company’s Fiscal 2014 outlook update,
the Company believes that this Co-60 supply will re-enter the
market either directly from the actual producer of the Co-60 rather
than the Co-60 supplier or via another distribution partner.
Nordion believes that the actual producer of the Co-60, who
previously provided Co-60 to the discontinuing supplier, is
maintaining or increasing its inventory of Co-60 and is
economically motivated to sell its Co-60 directly to customers or
to find another distribution partner for the sale of its Co-60. The
Company has become aware that a number of its customers have been
directly approached regarding the supply of Co-60 and that some of
Nordion’s customers may have already ordered Co-60 from this
source. The Company believes this source has the infrastructure and
licenses to supply Co-60, replacing the previous supplier in whole
or in part.
While Nordion cannot determine or estimate when, or to what
extent, the supply of Co-60 will resume, the Company continues to
believe that the current increase in requests for shipments from
Nordion is likely not permanent for the reasons noted above. While
Nordion’s outlook for Sterilization Technologies remains positive,
the emergence of this Co-60 supplier in the market may adversely
affect the Company’s Sterilization Technologies revenues.
Medical Isotopes and the Lack of an Alternative Supply Beyond
2016
Currently, the Company does not have an alternative supply of
reactor-based medical isotopes, the largest and higher margin
product line within Medical Isotopes, beyond 2016. The Canadian
government has publicly stated that Atomic Energy of Canada Limited
(“AECL”) will not produce reactor-based medical isotopes beyond
2016.
Nordion continues to explore supply alternatives to mitigate the
lack of supply from AECL, however it cannot be certain that it will
be able to secure an alternate source of commercial supply that is
viable. If the Company is able to secure an alternative arrangement
for the supply of reactor-based medical isotopes beyond 2016, such
an arrangement would be associated with certain risks including
significant capital expenditures, technical uncertainty with no
guarantee of success, lower gross margins and commercial supply not
being available before the Company’s current supply ends in
2016.
If the Company’s customers believe the Company will be
unsuccessful in obtaining long term isotope supply, they may
further reduce or altogether stop purchasing medical isotopes from
Nordion. If the Company is unable to secure a long term supply of
medical isotopes it may exit the reactor-based medical isotope
segment of its business. In addition to a loss of revenue,
Nordion’s cost structure following such an exit would include
certain stranded costs that are currently shared between the
Medical Isotopes and the Sterilization Technologies businesses
thereby potentially having an adverse impact on the financial
performance of the Sterilization Technologies business.
On April 24, 2014, the Company updated its Fiscal 2014 outlook
to indicate that due to continued incremental demand for
reactor-based medical isotopes, Nordion expected Medical Isotopes
revenues to be approximately 5% higher, a 45% increase, in Fiscal
2014 than the Company’s previous Fiscal 2014 outlook announced on
March 6, 2014. The Company continues to expect that the increase
will not to be permanent as most of the additional orders that have
been delivered by Nordion and have resulted in this increased
outlook, arose from the shutdown of key reactors and processing
facilities, which have since returned to service and resumed supply
capability.
No Alternative Acquisition Proposal Received
On April 25, 2014, the Company received unsolicited written
acquisition proposal from a third party (the “Third Party”) at a
proposed price of US$12.25 per share (the “Unsolicited Proposal”).
As previously disclosed, this acquisition proposal did not include
fully committed financing and was subject to other conditionality.
Following the receipt of this acquisition proposal, however,
Nordion and Sterigenics entered into an amendment to the
Arrangement Agreement increasing the Consideration to US$12.25, a
US$0.50 per share increase over the initial cash consideration of
US$11.75 per share. Nordion retained Canaccord Genuity as an
additional financial advisor to provide a variety of financial
advisory services, including assisting Nordion in reviewing the
Unsolicited Proposal.
The Arrangement Agreement does not preclude the Third Party (or
any other party) from proposing or making a new Acquisition
Proposal. However, since the Unsolicited Proposal, neither the
Third Party nor any other party has made any new proposal or offer
to the Company.
Potential Impact of the Arrangement Not Being Approved by
Shareholders
If the Arrangement is not approved by shareholders, either the
Company or the Purchaser may terminate the Arrangement Agreement at
its option.
If the Arrangement is not completed, the market price of the
shares may be materially adversely affected and there can be no
assurance that the Company will be able to find a party willing to
pay a price per share at least equal to the price to be paid
pursuant to the terms of the Arrangement. In addition, the
Arrangement Agreement provides that if an acquisition proposal is
made prior to the Meeting and this acquisition proposal is later
consummated after a negative vote of shareholders with respect to
the Arrangement, Nordion will be obligated, in specified
circumstances, to pay a termination fee of US$12 million to
Sterigenics.
Other
Nordion’s management information circular dated April 22, 2014,
as supplemented on May 8, 2014, contains important information
about the Arrangement and the Meeting and is available under
Nordion’s profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.
Canadian Shareholders who require assistance in voting their
proxies may direct their inquiries to Nordion’s proxy solicitation
agent for Canada, CST Phoenix Advisors, by toll-free telephone in
North America at
1-800-332-4904 or at 1-201-806-2222 outside of North America,
U.S. Shareholders who require assistance in voting their proxies
may direct their inquiries to Nordion's proxy solicitation agent
for the U.S., Innisfree M&A Incorporated, by toll-free
telephone in North America at 1-888-750-5834, or collect at
1-212-750-5833.
About Nordion Inc.
Nordion Inc. (TSX:NDN) (NYSE:NDZ) is a global health science
company that provides market-leading products used for the
prevention, diagnosis and treatment of disease. We are a leading
provider of medical isotopes and sterilization technologies that
benefit the lives of millions of people in more than 40 countries
around the world. Our products are used daily by pharmaceutical and
biotechnology companies, medical-device manufacturers, hospitals,
clinics and research laboratories. Nordion has over 400 highly
skilled employees in three locations. Find out more at
www.nordion.com and follow us at twitter.com/NordionInc.
Caution Concerning Forward-Looking Statements
This release contains forward-looking statements, within the
meaning of certain securities laws, including under applicable
Canadian securities laws and the “safe harbour” provisions of the
United States Private Securities Litigation Reform Act of 1995.
These forward-looking statements include, but are not limited to,
statements relating to our expectations with respect to: the timing
and outcome of the proposed acquisition by Sterigenics of all of
the outstanding common shares of Nordion; the anticipated benefits
of the transaction to the parties and their respective security
holders; the timing and anticipated receipt of required regulatory,
court and security holder approvals for the transaction; the timing
and anticipated enactment of Nordion and Theratronics Divestiture
Authorization Act; Sterigenics’ ability to complete its financing;
the ability of the parties to satisfy the other conditions to, and
to complete, the transaction; the anticipated timing of the annual
and special meeting of Nordion shareholders to consider the
transaction and for the closing of the transaction; the Company’s
fiscal 2014 outlook; the Company’s outlook on Sterilization
Technologies and the supply dynamics of Cobalt-60; the Company’s
supply and demand of reactor-based medical isotopes; and more
generally statements with respect to our beliefs, plans,
objectives, expectations, anticipations, estimates and intentions.
The words “may”, “will”, “could”, “should”, “would”, “outlook”,
“believe”, “plan”, “anticipate”, “estimate”, “project”, “expect”,
“intend”, “indicate”, “forecast”, “objective”, “optimistic”, and
similar words and expressions are also intended to identify
forward-looking statements. In respect of the forward-looking
statements and information concerning the anticipated benefits and
completion of the proposed transaction and the anticipated timing
for the completion of the transaction, Nordion and Sterigenics have
provided such statements and information in reliance on certain
assumptions that they believe are reasonable at this time,
including assumptions as to the time required to prepare and mail
security holder meeting materials; the ability of the parties to
receive, in a timely manner and on satisfactory terms, the
necessary regulatory, court and shareholder approvals; the timing
and anticipated enactment of the proposed amendments to the Nordion
and Theratronics Divestiture Authorization Act; the ability of the
parties to satisfy, in a timely manner, the other conditions of the
closing of the transaction; and other assumptions and expectations
concerning the transaction. There can be no assurance that the
proposed transaction will occur, or that it will occur on the terms
and conditions contemplated in this news release. The proposed
transaction could be modified, restructured or terminated.
Accordingly, readers should not place undue reliance on the
forward-looking statements and information contained in this news
release.
Forward-looking statements are necessarily based on estimates
and assumptions made by us in light of our experience and our
perception of historical trends, current conditions and expected
future developments, as well as other factors that we believe are
appropriate in the circumstances, but which are inherently subject
to significant business, political, economic, regulatory and
competitive uncertainties and contingencies. Readers are cautioned
that the foregoing list of factors is not exhaustive. Known and
unknown factors could cause actual results to differ materially
from those projected in the forward-looking statements.
Accordingly, this release is subject to the disclaimer and
qualified by the assumptions, qualifications and risk factors
referred to in our 2013 Annual Information Form (AIF) and our 2014
Management Information Circular, and our success in anticipating
and managing those risks. Our 2013 AIF, 2014 Management Information
Circular, and our other filings with the Canadian provincial
securities commissions and the US Securities and Exchange
Commission are available on SEDAR at www.sedar.com, on EDGAR at
www.sec.gov, and on Nordion’s website at www.nordion.com. We
caution readers not to place undue reliance on the Company’s
forward-looking statements, as a number of factors could cause our
actual results, performance or achievements to differ materially
from the beliefs, plans, objectives, expectations, anticipations,
estimates and intentions expressed in such forward-looking
statements.
The forward-looking statements contained in this news release
are made as of the date of this release and, accordingly, are
subject to change after such date. The Company does not assume any
obligation to update or revise any forward-looking statements,
whether written or oral, that may be made from time to time by us
or on our behalf, except as required by applicable law.
MEDIA:NordionShelley Maclean, 613-592-3400 x
2414Shelley.Maclean@nordion.comorINVESTORS:Ana
Raman, 613-595-4580investor.relations@nordion.com
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