MONTREAL, Jan. 14, 2026 (GLOBE NEWSWIRE) -- Velan Inc. (TSX: VLN) ("Velan" or the "Company") today announced that its controlling shareholder, Velan Holding Co. Ltd. ("Velan Holding"), the sole holder of the Company's multiple voting shares, has agreed to sell its 15,566,567 multiple voting shares and one subordinate voting share (representing approximately 72.1% of the Company's outstanding shares and 92.8% of its aggregate voting rights) to funds managed by Birch Hill Equity Partners Management Inc. ("Birch Hill"), at a price of C$13.10 per share, for aggregate gross proceeds of C$203,922,040.80 to Velan Holding and two other entities associated with shareholders of Velan Holding (the "VH Transaction"). Birch Hill is a leading Canadian investment partner with a 30-year track record of deploying patient capital and operational expertise to scale market leaders for long-term global growth.
Pursuant to a pre-closing reorganization, Velan Holding will, among other things, convert 2,290,075 multiple voting shares into the same number of subordinate voting shares. Therefore, giving effect to such pre-closing reorganization, 13,276,492 multiple voting shares and 2,290,076 subordinate voting shares will be sold to Birch Hill on closing of the VH Transaction (representing approximately 72.1% of the Company's outstanding shares and 91.9% of its aggregate voting rights) (collectively the "VH Transaction Shares").
The VH Transaction is expected to close in the first half of 2026, subject to the receipt of the required regulatory approvals and other customary closing conditions. The completion of the VH Transaction is not subject to any financing condition or approval by the Company's shareholders.
Birch Hill is purchasing the VH Transaction Shares pursuant to the private agreement exemption from the take-over bid requirements of National Instrument 62-104 - Take-Over Bids and Issuer Bids-
Birch Hill intends to maintain the Company's significant presence in Quebec including the Montreal head office, ensuring that Velan remains active in the local industrial sector while benefiting from the resources and capital necessary for its next phase of growth across Canada and internationally.
"We are excited to welcome Birch Hill as a long-term partner in Velan's continued journey. Birch Hill's demonstrated success supporting Canadian leaders aligns with our strategy and values. By combining their deep operational expertise and improved access to capital, we will be in a strong position to focus on accelerating execution of our business plans and working to deliver exceptional value to our customers, employees, shareholders and other stakeholders," said James A. Mannebach, Chief Executive Officer of Velan. "The Company continues to draw inspiration from and aspire to further the remarkable 75-year legacy of the founder of our business, A.K. Velan, and the leadership provided by the Velan family."
"We have immense respect for the 75-year legacy the Velan family has built, rooted in decades of engineering excellence and manufacturing expertise across critical global industries. We are proud to invest in a company with such strong Quebec heritage and international presence. We look forward to building on this foundation and supporting the Company's continued growth and innovation," said Pierre Schuurmans, COO and Partner at Birch Hill.
Birch Hill's investment strategy focuses on building resilient, high-performing businesses. This partnership improves Velan's access to capital and strategic support, strengthening its ability to compete globally and pursue long-term growth. The Birch Hill offer, made solely to Velan Holding on the terms of the VH Transaction, followed a review of strategic alternatives conducted under the ongoing supervision of the Company's special committee of independent directors (the "Special Committee") with the assistance of independent legal and financial advisors. While Velan is not a party to the VH Transaction, the Company has entered into a cooperation agreement with Birch Hill (the "Cooperation Agreement") to facilitate the consummation of the VH Transaction, notably as regards the obtaining of the applicable regulatory approvals.
Following this review and consideration of the VH Transaction, the Special Committee recommended to the Board of Directors of the Company (the "Board") (with Board members who are also principals of, or related to principals of, Velan Holding having recused themselves due to their interest in the Company via Velan Holding) that it is in the best interests of the Company to facilitate the VH Transaction and enter into the Cooperation Agreement. Under the terms of the Cooperation Agreement, the Company has agreed to suspend the declaration and payment of dividends until the earliest of closing of the VH Transaction or termination of the Cooperation Agreement in accordance with its terms, with ordinary course dividends currently planned to resume thereafter, as, if and when declared by the Board.
The Company estimates that transaction-related fees will be approximately C$12 million, as well as additional change of control triggered costs of approximately C$5 million relating mostly to the vesting and accelerated vesting of various incentive plans already in place at the time of the VH Transaction. Of this total amount, C$4 million has already been paid or accrued.
To support the long-term success of the Company in connection with the VH Transaction, Velan has also agreed to enter into an investor rights agreement with Birch Hill (the "Investor Rights Agreement") at closing of the VH Transaction, pursuant to which Birch Hill and its affiliates holding Velan shares will have the right to appoint up to four of seven nominees to the Board so long as they maintain ownership of more than 40% of the voting rights attached to the Company's issued and outstanding shares. At closing of the VH Transaction, it is anticipated that the size of the Board will be reduced to seven and the current directors who are also principals of, or related directors to succeed them.
The Cooperation Agreement (including the agreed form of Investor Rights Agreement) will be filed under the Company's SEDAR+ profile at www.sedarplus.ca in due course.
The Company wishes to clarify that the VH Transaction relates solely to Velan Holding's shareholdings. No other shareholders of the Company will be parties to the contemplated transaction, and no buyback, sale, or acquisition of shares held by shareholders other than Velan Holding or its associated entities is expected in connection with the VH Transaction.
Advisors to the Company and to Velan Holding
National Bank Financial is acting as financial advisor to the Company. Davies Ward Phillips & Vineberg LLP is acting as legal advisor to the Company, Norton Rose Fulbright Canada LLP is acting as legal advisor to the Special Committee and McCarthy Tétrault LLP is acting as legal advisor to Velan Holding.
Advisors to Birch Hill
TD Securities Inc. is acting as exclusive financial advisor to Birch Hill. Stikeman Elliott LLP is acting as legal advisor to Birch Hill.
About Velan Inc.
Founded in Montreal in 1950, Velan Inc. (www.velan.com) is one of the world's leading manufacturers of industrial valves, with sales of US$295 million in its last reported fiscal year. The Company employs approximately 1,200 people and has manufacturing plants in nine countries. Velan Inc. is a public company with its shares listed on the Toronto Stock Exchange under the symbol "VLN".
About Birch Hill
Birch Hill is a Canadian mid-market private equity firm with a long history of driving growth in its portfolio companies and delivering returns to its investors. Based in Toronto, Birch Hill currently has over C$6 billion in capital under management. Since 1994, the firm has made 74 investments, with 60 fully realized. Today, Birch Hill's 14 partner companies collectively represent one of Canada's largest corporate entities with over C$9 billion in total revenue and more than 40,000 employees.
Early Warning Disclosure by Birch Hill
Further to the requirements of National Instrument 62-104 -Take-Over Bids and Issuer Bids and National Instrument 62-103 - The Early Warning System and Related Take-Over Bid and Insider Reporting Issues, Birch Hill will file an early warning report in connection with the VH Transaction in accordance with applicable securities laws. A copy of the early warning report will be filed with applicable securities commissions and will be made available on the Company's profile on SEDAR+ at www.sedarplus.com. Further information and a copy of the early warning report may be obtained c/o Birch Hill, 81 Bay Street, Unit 4510, Toronto, Ontario, M5J 0E7, Tel: 416-775-3800.
Cautionary Note and Forward-Looking Statements
Certain statements made in this press release are forward-looking statements within the meaning of applicable securities laws, including, but not limited to, the expected benefits of the VH Transaction, the timing of various steps to be completed in connection with the VH Transaction, and other statements that are not material facts. Often, but not always, forward-looking statements can be identified by the use of forward-looking terminology such as "may", "will", "expect", "believe", "estimate", "plan", "could", "should", "would", "outlook", "forecast", "anticipate", "foresee", "continue" or the negative of these terms or variations of them or similar terminology.
Although the Company believes that the forward-looking statements in this press release are based on information and assumptions that are reasonable, including assumptions that Birch Hill and Velan Holding will receive, in a timely manner and on satisfactory terms, the necessary regulatory approvals, and that they will otherwise be able to satisfy, in a timely manner, the other conditions to the closing of the VH Transaction, and the resumption of ordinary course dividends currently planned after closing of the VH Transaction or termination of the Cooperation Agreement in accordance with its terms, these forward-looking statements are by their nature subject to a number of factors that could cause actual results to differ materially from management's
expectations and plans as set forth in such forward-looking statements, including, without limitation, the following factors, many of which are beyond the Company's control and the effects of which can be difficult to predict: (a) the possibility that the VH Transaction will not be completed on the terms and conditions, or on the timing, currently contemplated, and that it may not be completed at all, due to a failure to obtain or satisfy, in a timely manner or otherwise, required regulatory approvals and other conditions of closing necessary to complete the VH Transaction or for other reasons; (b) the possibility of adverse reactions or changes in business resulting from the announcement or completion of the VH Transaction; (c) the possibility of litigation relating to the VH Transaction; (d) risks related to diverting management's attention from the Company's ongoing business operations; and (e) other risks inherent to the business carried out by the Company and factors beyond its control which could have a material adverse effect on the Company or its ability to complete the VH Transaction.
The Company cautions investors not to rely on the forward-looking statements contained in this press release when making an investment decision in their securities. Investors are encouraged to read the Company's filings available under its profile on SEDAR+ at www.sedarplus.ca for a discussion of these and other risks and uncertainties. The forward-looking statements in this press release speak only as of the date of this press release and the Company undertakes no obligation to update or revise any of these statements, whether as a result of new information, future events or otherwise, except as required by law.
Contact:
Rishi Sharma, Chief Financial and Administrative Officer Velan Inc.
(438) 817-4430
Rishi.sharma@velan.com
Sabine Hawa, Media Contact Crestview Strategy
(438) 223-3720
Sabine.hawa@crestviewstrategy.com
