Mr. James Mannebach reports

FLOWSERVE INTENDS TO TERMINATE THE ARRANGEMENT AGREEMENT AS REGULATORY APPROVAL FROM FRANCE WILL NOT BE OBTAINED

In connection with the arrangement agreement made as of Feb. 9, 2023, among Velan Inc., 14714750 Canada Inc. (purchaser) and Flowserve U.S. Inc. (parent and, together with purchaser, Flowserve), as amended by the first amendment to the arrangement agreement dated March 27, 2023, that it has been informed by Flowserve of its intent to, following the occurrence of the outside date on Oct. 7, 2023, and in accordance with the terms of the arrangement agreement, send a notice to Velan to terminate the arrangement agreement, considering that the regulatory approval (as such term is defined in the arrangement agreement) from France has not and will not be obtained.

As previously disclosed, the conclusion of the transactions set out in the arrangement agreement was conditional on the regulatory approvals, including one from France. In order to meet that key condition, Flowserve offered a package of remedies and undertakings to the French authorities. The French authorities have now informed the parties that they will not provide the requisite regulatory approval for the sale to Flowserve regardless of such remedies or otherwise. Flowserve has consequently informed Velan of its intention to terminate the arrangement agreement following the outside date. According to the terms of the arrangement agreement, no termination fee will be payable by either party.

Velan will resume operations as an independent business, free of the covenants and other restrictions of the arrangement agreement.

"We thank our employees and other stakeholders who supported the proposed transaction. Although we are disappointed with the outcome and the decision of the French regulators, we remain confident in the future of Velan's business. We will now turn our entire focus to the operation of a successful business while continuing to assess all strategic options available to the company to create value for all of our stakeholders," said James Mannebach, chair of the board of directors of Velan.

About Velan Inc.

Founded in Montreal in 1950, Velan is one of the world's leading manufacturers of industrial valves. Velan Inc. is a family controlled public company, employing approximately 1,650 people with manufacturing facilities in nine countries. Velan is a public company with its shares listed on the Toronto Stock Exchange under the symbol VLN.

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