Capitol Health shares are up 3.3 per cent today after the firm announced plans to create one of Australia's biggest providers of diagnostic imaging after making a $356 million takeover offer for Integral Diagnostics.
The deal, revealed by The Australian Financial Review's Street Talk column on Wednesday morning, values Integral at $2.46 a share, based on Capitol's most recent close of $1.89. Capitol is offering 6.9 Capitol shares and 36¢ cash for each Integral share.
Crucially, fund managers Adam Smith Asset Management, Microequities Asset Management, Regal Funds Management and Wilson Asset Management, who together own 19.55 per cent of Integral, have thrown their support behind Capitol's plan.
Capitol and its chief executive Andrew Harrison will now need to win over Integral's doctor shareholders.
"We look forward to engaging with Integral's highly regarded doctor partners and associates."
Capitol said the deal would create a company with $64 million annual earnings and $70 million net debt, based on 2018 financial year forecasts. Synergies from the deal have been put at $5 million a year.
The deal is priced at 11 times forecast earnings before interest, tax, depreciation and amortisation.
The offer was pitched at a 30 per cent premium to Integral's last close and well above the company's IPO price of $1.91 two years ago.