February 11, 2010: MDS Inc has signed agreements to divest its remaining MDS Pharma Services Early Stage business, which provides discovery to Phase 2a clinical trial services to biotechnology and pharmaceutical companies, for $45 million and certain minority equity interests. The $45 million purchase price includes a five-year, $25 million note and $20 million in cash that will be adjusted for working capital and other items; after currently projected adjustments, the $20 million cash payment is estimated to result in net cash proceeds of about $7 million.
Upon the close of the sale, MDS will have completed its repositioning strategy and will be focused on building its MDS Nordion business, which has leadership positions in medical imaging and radiotherapeutics, and sterilisation technologies.
Under the terms of the agreements, MDS will divest its Discovery and Pre-Clinical operations in Bothell, Washington, USA; Lyon, France; and Taipei, Taiwan, to Ricerca Biosciences LLC, a provider of early-stage CRO services.
The Early Stage Development operations, which consist of Phase 1 clinics and bioanalytical labs, and the company’s Development and Regulatory Services consultancy will be sold to a new corporation primarily owned by Bain Capital Ventures and SV Life Sciences, two private investment firms with established holdings in life sciences, including Ricerca.
The divestiture of the MDS Pharma Services Early Stage business does not include the Early Stage Development facility in Montreal, Canada, which will be closed. The decommissioning, through which about 225 jobs will be eliminated, will take place in stages over the next 12 months and is expected to be completed by the end of February 2011. In addition, the sale does not include MDS Pharma Services headquarters in King of Prussia, Pennsylvania, USA. While MDS expects the majority of MDS Pharma Services employees to move to Ricerca or the new corporation, the company expects that about 50 people will not retain their positions.
The transaction is expected to close within two months, and is subject to customary approvals and closing conditions, including certain regulatory approvals and compliance with labour laws related to an operation in France.
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