MDS, Inc. has signed an agreement to sell its Canadian Diagnostic Services business to Borealis Infrastructure Management, Inc. in a $1.2 billion transaction. This sale is part of the company’s strategic shift to focus on the life sciences market and streamline its cost structure to be more competitive.

“The sale of our diagnostics business represents a major milestone for MDS in the transition to a global life sciences company,” said Stephen P. DeFalco, president and chief executive officer, MDS. “We will be able to focus exclusively on life sciences markets, where incredible advances are being made to diagnose and treat diseases. This agreement represents a great outcome for our shareholders, our employees and the customers we serve.”

“We see an exciting future for this business,” said Michael Rolland, senior vice president of Borealis. “We look forward to working with the talented professional staff at MDS Diagnostic Services to ensure that they continue to lead the industry in the delivery of laboratory services that support the healthcare needs of Canadians.”

The transaction, subject to customary approvals and conditions, is expected to close by the end of January 2007.