Velan Holding to sell its entire holdings in Velan Inc. to Birch Hill Equity Partners

Core Viewpoint - Velan Inc. has announced the sale of approximately 72.1% of its outstanding shares to Birch Hill Equity Partners for C$13.10 per share, totaling approximately C$203.9 million, which is expected to enhance the company's growth potential and operational capabilities [1][3][6]. Group 1: Transaction Details - Velan Holding will sell 15,566,567 multiple voting shares and one subordinate voting share, representing about 72.1% of the company's outstanding shares and 92.8% of its voting rights [1]. - Following a pre-closing reorganization, the sale will include 13,276,492 multiple voting shares and 2,290,076 subordinate voting shares, maintaining the same percentage of outstanding shares and voting rights [2]. - The transaction is anticipated to close in the first half of 2026, pending regulatory approvals and customary closing conditions [3]. Group 2: Birch Hill's Role and Strategy - Birch Hill aims to maintain Velan's presence in Quebec and support its growth both locally and internationally [4]. - The partnership is expected to improve Velan's access to capital and strategic support, enhancing its competitive position globally [6]. - Birch Hill's investment strategy focuses on building resilient, high-performing businesses, which aligns with Velan's long-term growth objectives [6]. Group 3: Governance and Agreements - Velan has entered into a Cooperation Agreement with Birch Hill to facilitate the transaction, which includes suspending dividend payments until the transaction closes [7]. - An Investor Rights Agreement will be established, allowing Birch Hill to appoint up to four of seven nominees to Velan's Board, contingent on maintaining ownership of more than 40% of voting rights [9]. - The Special Committee of independent directors recommended the transaction as being in the best interests of the company [7]. Group 4: Financial Implications - The estimated transaction-related fees are approximately C$12 million, with additional change of control costs of about C$5 million [8]. - Velan's last reported fiscal year sales were US$295 million, indicating a significant operational scale [14].