February 26, 2007 – MDS Inc. (TSX:MDS; NYSE: MDZ), a global life sciences company, announced today that it has concluded the sale of its Canadian laboratory services business, MDS Diagnostic Services, to Borealis Infrastructure Management Inc. in a CAD$1.325 billion transaction.

Under this agreement, Borealis Infrastructure, an investment entity of Ontario Municipal Employees Retirement System (OMERS), has acquired MDS Diagnostic Services.
This laboratory services business will continue to operate under the name of MDS Diagnostics Services until later this year. From the total transaction price of CAD$1.325 billion, MDS will realize net proceeds of approximately CAD$1.052 billion, comprised of $977 million in cash and $75 million in an unconditional note, payable in March 2009, after provision for taxes, expenses and amounts attributable to minority interests.

The MDS Board of Directors has authorized a CAD$500 million one-time share buyback of its common shares through a dutch auction-type substantial issuer bid. The company intends to mail an issuer bid circular with the details for tendering common shares to shareholders on February 28, 2007. The company expects to repurchase up to 16.5% of the common shares in the range of CAD $21.00 to $23.50 per share through the issuer bid which will expire on April 5, 2007.

“With this transaction, we have closed a chapter in our company’s history by completing our transition to a global life sciences company,” said Stephen P. DeFalco, President and Chief Executive Officer, MDS Inc. “With our recently announced plans to acquire Molecular Devices Corporation, we have begun a new and exciting chapter focused on growth.”

With the close of this transaction, MDS is now a pure play, global life sciences company. It generates 95 percent of its revenues from global markets in which the Company’s three business units, MDS Pharma Services, MDS Nordion, and MDS Sciex operate.