MDS Inc., a medical sciences company based in Mississauga, Ont., says it intends to sell two of its three units to focus on the troubled business of medical isotopes.

MDS three-month chart

It hopes to extract hundreds of millions of dollars for its shareholders in the process, it announced Wednesday. Its share price was up $2.04, or nearly 32 per cent, to $8.46 in mid-afternoon Toronto trading.

The surviving MDS business would be MDS Nordion, an Atomic Energy of Canada Ltd. division privatized by the Mulroney government in 1991.

Nordion processes and distributes isotopes used in medical imaging, radiation therapy and other fields. Its primary source of supply, an elderly AECL reactor at Chalk River, Ont., has been shut down for repairs since May, causing worldwide isotope shortages.

On Wednesday, MDS announced these things:

• An agreement to sell its MDS Analytical Technologies business, a supplier of such research tools as mass spectrometers, to Danaher Corp. of Washington, D.C., for $650 million in cash.
• A plan to distribute $400 million to $450 million of the money to shareholders, subject to approval by regulators and shareholders.
• An advance vote of support for that idea from two of the biggest shareholders, ValueAct Capital of San Francisco and Enterprise Capital Management of Toronto, which between them own about 23 per cent of the company.
• A desire to sell its MDS Pharma Services unit, which does contract research work in drug discovery and development.
• An exclusive future focus on the Nordion isotopes business.

AECL's Chalk River operation, a source of isotopes for MDS, has been hobbled by safety-related shutdowns. (Canadian Press)

It described the moves as a "strategic repositioning" following a comprehensive review by a committee of independent directors working with management and financial and legal advisers.

"The economic downturn and the prolonged shutdown of Atomic Energy of Canada Ltd.'s National Research Universal (NRU) reactor have created significant challenges for our businesses that contributed to this course of action," MDS chief executive Stephen DeFalco said in a statement.

MDS has been urging the federal government to revive AECL's trouble-plagued MAPLE reactor project, which was designed to replace the NRU reactor before it was shelved last year. MDS, which filed a lawsuit against the government over the cancellation, said it had invested about $350 million in the project.