by Kylar Loussikian

Integral Diagnostics will emerge as a near $1 billion diagnostics imaging group after agreeing to merge with Capitol Health in a deal that values its smaller rival at about $413 million.

Integral told investors that the two companies had “highly complementary footprints” with 155 clinics and 350 radiologists. It would have recorded revenues of some $651 million to June 30 and earnings of $93 million.

The proposed merger, which is subject to a month of due diligence, comes amid upheaval in the broader radiology and medical services market. Healius, a significantly larger player focused on pathology, has put its own radiology business, Lumus Imaging, on the auction block.

Healius said last month that it had engaged UBS to advise on the sale as part of a strategy to focus on its core pathology business. Lumus operates 150 imaging sites providing X-rays, ultrasounds, MRIs and CT scans. Macquarie has put a $654 million valuation on Lumus.

Shareholders in Capitol, which operates 65 sites, will own 37 per cent of the company should the merger with Integral go ahead. At the close of trade on Friday, the deal implied a 32.64¢ price for Capitol shares.

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