Reactor shutdown prompts MDS sell-off

03 September 2009

The prolonged shutdown of a Canadian isotope-producing reactor has contributed to a "strategic repositioning" decision by life sciences company MDS Inc that will see it sell off its non-radioisotope business interests.

Toronto-based MDS Inc has announced it is to sell drug discovery and life sciences research tools company MDS Analytical Technologies to medical technologies company Danaher Corporation for $650 million in a transaction due to close by the end of the year. It has also said it intends to sell its MDS Pharma Services business, which provides drug discovery and early-stage development solutions for the pharmaceutical and biotechnology sectors.

 

The sales would leave the company focused solely on its MDS Nordion business, which provides medical isotopes for molecular and diagnostic imaging, radiotherapeutics and sterilization.

NRU back early 2010

AECL has reiterated that it anticipates that NRU will return to service in the first quarter of 2010, on the strength of work already done at the stricken reactor.

In its latest update on its activities at NRU, the company reported that its Non Destructive Examination team has completed the third stage of examination of the vessel wall, using special tooling, and that work continues on developing and testing the equipment and processes needed to carry out the repairs.

 

MDS Inc will use some of the proceeds from the MDS Analytical Technologies sale to help pay off debts, cover transaction and restructuring costs and fund ongoing operations of the remaining business. It intends to return up to $450 million to shareholders by way of a share buyback.
 
The extended outage of the National Research Universal (NRU) reactor, one of the world's major producers of radioisotopes, was cited as a factor behind the decision by MDS Inc president and CEO Stephen DeFalco. "The economic downturn and the prolonged shutdown of Atomic Energy of Canada Ltd's (AECL) National Research Universal reactor have created significant challenges for our businesses that contributed to this course of action," he said.
 
NRU produces about a third of the world's nuclear medicine isotope supplies. AECL supplies NRU's output, plus the smaller quantities of radioisotopes produced in some of its power reactors, to NDS Nordion. However, the 52-year old reactor has been out of action since a small leak of heavy water was discovered in May and is not expected to re-enter service until 2010. The short half-life of medical radioisotopes, and their consequent short shelf-life, means the impact of such a prolonged reactor outage is quickly felt.

According to MDS Inc, MDS Nordion is weathering the NRU shutdown and is generating cashflow from its sterilization technologies and radiopharmaceuticals activities.

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