Integral Diagnostics: Capitol Merger Makes Sense but Value-Dilutive

No-moat Integral Diagnostics and Capitol Health are seeking to merge. The firms have agreed to complete due diligence and finalize a binding agreement during four weeks of mutual exclusivity. The current proposal would see Capitol shareholders receive 0.12849 Integral shares per Capitol share, implying 63% ownership of the combined group for Integral shareholders and 37% for Capitol shareholders. This would add a significant 138 million shares, a 59% expansion of Integral’s current share count.