Birch Hill Secures Control of Velan Inc. in C$204 Million Deal with Velan Holding
Montreal, Thursday, 15 January 2026.
Birch Hill assumes control of Montreal’s Velan Inc. by acquiring 92.8% of voting rights for C$204 million, marking a pivotal strategic shift for the industrial valve manufacturer.
A Historic Transfer of Power
On January 14, 2026, Velan Inc. (TSX: VLN) announced a definitive agreement that will see its controlling shareholder, Velan Holding Co. Ltd., divest its entire equity stake to Birch Hill Equity Partners [1][2]. The transaction involves the sale of 15,566,567 multiple voting shares and one subordinate voting share at a price of C$13.10 per share [1][3]. This strategic acquisition generates aggregate gross proceeds of C$203,922,040.80 for Velan Holding and its associated entities, effectively ending the founding family’s majority control over the Montreal-based manufacturer [1][2]. The stake being sold represents approximately 72.1% of Velan Inc.’s outstanding shares and commands 92.8% of the company’s aggregate voting rights [1][2].
Strategic Reorganization and Governance
Following a pre-closing reorganization, Birch Hill is set to acquire a total of 13,276,492 multiple voting shares and 2,290,076 subordinate voting shares [1][2]. This structural adjustment will result in the private equity firm holding approximately 91.9% of the voting rights upon the deal’s completion [1][4]. The transaction triggers significant governance changes; upon closing, the Board of Directors will be reduced to seven members [4]. Under the terms of the investor rights agreement, Birch Hill retains the right to nominate up to four directors, contingent on the firm maintaining ownership of at least 40% of the voting rights [2][4]. Current directors affiliated with Velan Holding are expected to resign to facilitate this transition [4].
Financial Implications and Market Context
The transition of ownership entails substantial one-time costs for Velan Inc. The company estimates transaction-related fees will total approximately C$12 million, with an additional C$5 million incurred due to change-of-control provisions, bringing the total estimated expense to 17 million [1]. The agreed purchase price of C$13.10 per share [1] stands in contrast to the public market valuation immediately preceding the announcement. On January 13, 2026, Velan shares traded on the Toronto Stock Exchange at C$18.90, after declining by 33 cents that day [5]. This pricing disparity highlights the distinct nature of the private agreement regarding the multiple voting shares, which is exempt from standard take-over bid requirements [1].
Future Outlook
The transaction is expected to close in the first half of 2026, subject to customary regulatory approvals [1][2]. Despite the change in control, Birch Hill has committed to maintaining Velan’s head office in Montreal and its operational presence in Quebec [1][4]. Velan Inc., which reported US$295 million in sales for its last fiscal year, intends to leverage Birch Hill’s C$6 billion in capital under management to accelerate its business plans [1][2]. Furthermore, the company plans to resume ordinary course dividends following the successful closure of the transaction [2].