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Kirschner OKs acquisition by Texas firm


Kirschner Medical Corp. in Timonium said yesterday that it has agreed to be sold to Houston-based Henley International Inc. in a deal valued at about $82 million.

Under terms of a preliminary agreement, Kirschner shareholders would receive 0.92 shares of Henley common stock for each share of Kirschner.

The stock transaction is worth about $37 million, said C. Scott Harrison, chairman and chief executive of Kirschner. Henley has also agreed to absorb about $45 million of Kirschner debt.

Kirschner stock closed yesterday at $11.50 a share, up $2.75. Henley closed down $1.375 at $15 a share.

Kirschner makes and sells orthopedic products and video systems used inside a patient's body during surgery. The company has about 2.5 million shares outstanding, along with 440,000 shares in options and warrants.

Henley, a fast-growing company that has made eight other acquisitions in the medical field over the past six years, makes physical-therapy equipment and specialty hospital products.

Henley posted sales of $45.3 million last year and earnings of $1.6 million. Its sales and earnings have grown steadily since 1987, when it earned $309,000 on sales of $6.8 million.

Officials at both companies said the deal was the right prescription to help cure Kirschner's financial ills and put it on a path to growth.

Mr. Harrison said plans call for the formation of a new company with Kirschner and Henley operating as divisions. The still-unnamed company is expected to be based in Houston.

The fate of Kirschner's approximately 200 workers at its Timonium headquarters remained unclear yesterday. Mr. Harrison said he does not expect any major disruption of personnel, but Peter M. Graham, executive vice president of Henley, said that "there has been no statement [on the workers' future] one way or the other."

Mr. Graham said that in its past acquisitions Henley sometimes uprooted and moved companies. Other times, he said, everything has beenleft in place.

At least one stock analyst who follows the company agreed with the companies' assessment that the merger would benefit Kirschner.

Lawrence C. Marsh at Wheat First Securities Inc. in Richmond, Va., said the proposed merger would help reduce Kirschner's debt and give it "the ability to grow its business better." Kirschner reported income last year of $4.2 million on sales of $71.2 million.

The company said the deal remains subject to the signing of a definitive agreement by June 25, and to the approval of directors and shareholders of each company and of Kirschner's principal lender, Maryland National Bank.

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