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

Executive Summary

• Velan Holding Co. Ltd. will sell approximately 72 % of Velan Inc.’s outstanding shares (15,566,567 multiple voting shares and one subordinate voting share) to Birch Hill Equity Partners for C$13.10 per share, generating gross proceeds of C$203.9 million.
• The transaction (“VH Transaction”) is expected to close in the first half of 2026, subject to regulatory approvals; it is not contingent on financing or shareholder approval and will be effected under the private‑agreement exemption from take‑over bid rules.
• Post‑closing, Birch Hill will obtain rights to appoint up to four of seven board directors, and Velan Inc. will suspend dividend declarations until the transaction closes or the cooperation agreement terminates.

Key Details

• Shares Sold: 13,276,492 multiple voting shares + 2,290,076 subordinate voting shares (≈ 72.1 % of outstanding shares; ≈ 91.9 % of voting rights).
• Purchase Price: C$13.10 per share.
• Aggregate Gross Proceeds: C$203,922,040.80 to Velan Holding and related entities.
• Closing Timeline: Expected in H1 2026, subject to required regulatory approvals and customary closing conditions.
• Financing Condition: None – the deal is not financing‑contingent.
• Cooperation Agreement: Velan Inc. entered into a Cooperation Agreement with Birch Hill to facilitate regulatory approvals; dividend declarations are suspended until closing or termination of this agreement.
• Transaction‑Related Fees & Costs: Estimated C$12 million in fees plus ≈ C$5 million change‑of‑control costs (vested incentive plan accelerations); C$4 million already paid/accrued.
• Board Composition Post‑Closing: Board size to be reduced to seven members; Birch Hill (and affiliates holding >40 % voting rights) may appoint up to four of the seven directors.
• Investor Rights Agreement: At closing, Birch Hill will have the right to appoint up to four of seven board nominees while maintaining >40 % voting ownership.
• Advisors:
• To Velan Inc./Velan Holding – National Bank Financial (financial), Davies Ward Phillips & Vineberg LLP, Norton Rose Fulbright Canada LLP, McCarthy Tétrault LLP (legal).
• To Birch Hill – TD Securities Inc. (exclusive financial), Stikeman Elliott LLP (legal).
• Regulatory Filings: Cooperation Agreement and related documents to be filed on SEDAR+. Birch Hill will file an early‑warning report per NI 62‑104/62‑103.

Notable Quotes

“We are excited to welcome Birch Hill as a long‑term partner… 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…” – James A. Mannebach, CEO, Velan Inc.

“We have immense respect for the 75‑year legacy the Velan family has built… We look forward to building on this foundation and supporting the Company’s continued growth and innovation.” – Pierre Schuurmans, COO & Partner, Birch Hill.