The Competition Bureau has revealed that it obtained court orders as part of an investigation into the impacts a proposed merger of two medical isotope producers may have on Canada’s nuclear medicine sector.
The federal law-enforcement agency’s investigation, which began March 12, relates to BWX Technologies Inc.’s BWXT-N proposed acquisition of Kinectrics Holdings Inc. announced Jan. 7 at a purchase price of $782.7-million, including assumption of debt and pension liabilities.
Although both companies perform a wide range of nuclear-related activities, particularly in the commercial power market, the investigation appears to be focused on nuclear medicine only.
The bureau has the authority to review all mergers in Canada. Its allegations have not been proven in court. The bureau declined an interview request from The Globe and Mail on Wednesday, saying it “conducts its work in private.” BWXT also declined an interview request.
The Federal Court granted the orders, which were revealed by the bureau on Wednesday. The orders require nuclear power giants Ontario Power Generation, Bruce Power and the Canadian division of French nuclear giant Framatome to produce records concerning the transaction.
According to an order signed by Justice Denis Gascon on Tuesday, the sought records include financial statements, sales data, marketing plans, presentations, organizational charts and messages from messaging apps.
In an affidavit filed last month, competition law officer Kevin McWhinnie – who leads the bureau’s case team – said the nuclear medicine industry is concentrated among only a few key players, many of which have exclusive long-term arrangements with suppliers and customers. Equipment used to irradiate isotopes, including nuclear power reactors, are also scarce.
“There are several ways the Proposed Transaction may harm competition, including through the foreclosure of key inputs from competing medical isotope processors,” Mr. McWhinnie said. “These inputs include enriched stable isotopes, medical isotopes, and the systems required to irradiate isotopes.”
BWXT, based in Lynchburg, Va., employs more than 8,700. Its builds reactor cores and other components for the U.S. Navy’s nuclear submarines and aircraft carriers, as well as major components for nuclear power reactors. It also has a large manufacturing plant in Cambridge, Ont. The company’s nuclear medicine activities have grown considerably in recent years.
Kinectrics, based in Toronto, employs more than 1,300 technical staff working in laboratories worldwide. Originally the research division of Ontario Hydro, a monolithic provincial power utility, it was spun off after the utility was broken up in the late 1990s.
Nuclear medicine involves using radiopharmaceuticals to diagnose and treat illnesses, notably cancer. Kinectrics provides isotope irradiation services, including for lutetium-177, a stable isotope from which radiopharmaceuticals are derived.
Rex Geveden, BWXT’s chief executive officer, described lutetium-177 in January as “the most critical and widely used therapeutic isotope today” and called Kinectrics the largest non-government producer of its precursor material, ytterbium-176. Kinectrics has a joint venture with Framatome Canada, called Isogen, which enables production of medical isotopes using Canada’s homegrown power reactor, the Candu.
According to the bureau, BWXT manufactures radiopharmaceuticals and medical isotopes at an 80,000-square-foot plant in Ottawa. It has a partnership with OPG subsidiary Laurentis Energy Partners to produce medical isotopes using OPG’s Candus. BWXT’s growing nuclear medicine business includes producing actinium-225, which is used to treat cancer.
“The marriage of Kinectrics’s irradiation services and stable isotope production with BWXT’s medical isotope processing and nuclear medicine contract manufacturing is a more end-to-end offering for the fast-growing nuclear medicine market,” Mr. Geveden said on a Jan. 7 conference call discussing the acquisition, which was expected to close in the middle of this year.