ValueAct Capital Master Fund, L.P.

September 03, 2009 17:35 ET

ValueAct Capital Master Fund, L.P.: News Release

SAN FRANCISCO, CALIFORNIA--(Marketwire - Sept. 3, 2009) - ValueAct Capital Master Fund, L.P. announced today that it has entered into an agreement with a subsidiary of Danaher Corporation pursuant to which it has agreed to vote its common shares in MDS Inc., in favour of the purchase of MDS Analytical Technologies business by Danaher, as more fully described in the attached Early Warning Report.



EARLY WARNING REPORT

UNDER NATIONAL INSTRUMENT 62-103


1. Name and Address of Offeror:

ValueAct Capital Master Fund, L.P.

435 Pacific Avenue, 4th Floor

San Francisco, CA 94133

2. The designation and number or principal amount of securities and the offeror's securityholding percentage in the class of securities of which the offeror acquired ownership or control in the transaction or occurrence giving rise to the obligation to file the news release, and whether it was ownership or control that was acquired in those circumstances:

On September 2, 2009, ValueAct Capital Master Fund, L.P. ("ValueAct Master Fund") entered into a Support Agreement (the "Support Agreement") with DH Technologies Development PTE Ltd. (the "Buyer"). Pursuant to the terms of the Support Agreement, ValueAct Master Fund made certain representations and agreements for the benefit of the Buyer in consideration for the Buyer's entering into a Stock and Asset Purchase Agreement (the "Transaction Agreement"), dated September 2, 2009, with MDS Inc. (the "Issuer"). Under the Transaction Agreement, the Buyer has agreed to purchase from the Issuer its MDS Analytical Technologies business, subject to shareholder and regulatory approvals and other closing conditions.

In the Support Agreement, ValueAct Master Fund agreed with the Buyer during the term of the Support Agreement, among other things and subject to certain exceptions: (i) not to sell or transfer its shares of the Issuer or any voting rights with respect to such shares until the day following the record date to be set for the Issuer's shareholder meeting to approve the Transaction Agreement (provided that the foregoing does not prohibit ValueAct Master Fund from selling or hedging its economic interest in the Issuer's shares); (ii) not to solicit, initiate, encourage or enter into certain other types of acquisition transactions involving the Issuer and (iii) to vote all of its Issuer shares at any meeting of the Issuer's shareholders in favour of the transactions contemplated by the Transaction Agreement and against any action that is intended or would reasonably be expected to impede or interfere with the transactions contemplated by the Transaction Agreement.

The Support Agreement and ValueAct Master Fund's obligations under the Support Agreement shall terminate upon the earliest of: (i) the consummation of the transactions contemplated by the Transaction Agreement; (ii) the termination of the Transaction Agreement in accordance with its terms; (iii) the occurrence of certain changes to the recommendation of the board of directors of the Issuer with respect to the Transaction Agreement and (iv) December 29, 2009.

3. The designation and number or principal amount of securities and the offeror's securityholding percentage in the class of securities immediately after the transaction or occurrence giving rise to the obligation to file the news release:

The offerors collectively own 23,107,700 common shares of the Issuer. Based on a total number of outstanding common shares of 120,137,229, as disclosed in the Issuer's annual information form for the period ended October 31, 2008, the offerors' securityholding percentage of the common shares, before and after entering into the Support Agreement, was approximately 19.2%.

4. The designation and number or principal amount of securities and the percentage of outstanding securities of the class of securities referred to in paragraph 3 over which

(i) the offeror, either alone or together with any joint actors, has ownership and control:

23,107,700 common shares of the Issuer, comprising approximately 19.2% of the outstanding common shares of the Issuer, as described in paragraph 3.

(ii) the offeror, either alone or together with any joint actors, has ownership but control is held by other persons or companies other than the offeror or any joint actor:

Not applicable.

(iii) the offeror, either alone or together with any joint actors, has exclusive or shared control but does not have ownership:

Not applicable.

5. The name of the market in which the transaction or occurrence that gave rise to the news release took place:

Not applicable.

6. The value, in Canadian dollars, of any consideration offered per security if the offeror acquired ownership of a security in the transaction or occurrence giving rise to the obligation to file a news release:

Not applicable.

7. The purpose of the offeror and any joint actors in effecting the transaction or occurrence that gave rise to the news release, including any future intention to acquire ownership of, or control over, additional securities of the reporting issuer:

The ownership by the offerors of the common shares of the issuer is for investment purposes. In pursuing such investment purposes, the offerors, alone or together with joint actors, may, subject to the terms of the Support Agreement as described above, hold, vote, trade, dispose or otherwise deal in the common shares of the Issuer at times, and in such manner, as they deem advisable to benefit from changes in market prices of such common shares, changes in the operations of the Issuer, its business strategy or prospects, or from sale or merger of the Issuer. To evaluate such alternatives, the offerors, alone or together with joint actors, will routinely monitor the Issuer's operations, prospects, business development, management, competitive and strategic matters, capital structure, and prevailing market conditions, as well as alternative investment opportunities, liquidity requirements of the offerors and their joint actors and other investment considerations. Consistent with its investment research methods and evaluation criteria, the offerors and their joint actors may discuss such matters with management or directors of the Issuer, other shareholders, industry analysts, existing or potential strategic partners or competitors, investment and financing professionals, sources of credit and other investors. Such factors and discussions may materially affect, and result in, subject to the terms of the Support Agreement, the offerors and their joint actors modifying their ownership of common shares of the Issuer, exchanging information with the Issuer pursuant to appropriate confidentiality or similar agreements, proposing changes in the Issuer's operations, governance or capitalization. The offerors and their joint actors reserve the right to formulate other plans and/or make other proposals, and take such actions with respect to their investment in the Issuer or dispose of all the common shares of the Issuer beneficially owned by them, or any economic interests in such common shares, in the public market or privately negotiated transactions, all in accordance with the Support Agreement. The offerors, alone or together with joint actors, may at any time, subject to the terms of the Support Agreement, reconsider and change their plans or proposals relating to the foregoing.

8. The general nature and the material terms of any agreement, other than lending arrangements, with respect to securities of the reporting issuer entered into by the offeror, or any joint actor, and the issuer of the securities or any other entity in connection with the transaction or occurrence giving rise to the news release, including agreements with respect to the acquisition, holding, disposition or voting of any of the securities:

See paragraph 2 above for a description of the Support Agreement.

The offerors and the joint actors referred to in paragraph 9 below (collectively the "VA Parties") are party to an agreement (the "Agreement") with Gregory P. Spivy and the Issuer, dated as of April 21, 2008 pursuant to which Mr. Spivy, a partner of one of the VA Parties, was appointed to the board of directors of the Issuer. Pursuant to the Agreement the VA Parties have agreed to restrictions on their ability to propose certain transactions regarding the Issuer. Reference should be made to the full text of the Agreement that has been publicly filed by the issuer on www.sedar.com.

9. The names of any joint actors in connection with the disclosure required by this report:

VA Partners I, LLC, ValueAct Capital Management, L.P., ValueAct Capital Management, LLC, ValueAct Holdings, L.P., and ValueAct Holdings GP, LLC.

10. In the case of a transaction or occurrence that did not take place on a stock exchange or other market that represents a published market for the securities, including an issuance from treasury, the nature and value, in Canadian dollars of the consideration paid by the offeror:

Not applicable.

11. If applicable, a description of any change in any material fact set out in a previous report by the entity under the early warning requirements or Part 4 of National Instrument 62-103 in respect of the reporting issuer's securities:

The information set out above supplements and updates the information provided in the offerors' early warning report dated April 22, 2008.

12. If applicable, a description of the exemption from securities legislation being relied on by the offeror and the facts supporting that reliance:

Not applicable.



Dated September 3, 2009.

VALUEACT CAPITAL MASTER FUND,
L.P. by VA Partners I, LLC, its general partner

By: (signed) G. Mason Morfit
G. Mason Morfit.
Vice-President


Contact Information

  • ValueAct Capital Master Fund, L.P.
    Dorothea Walsh
    (415) 249-1211