Center firms Medical Resources and NMR of America renew merger talks

Differences in management philosophy are resolved

The way co-president William Farrell explains it, NMR of Americais potentially the ideal mate for his Medical Resources imagingcenter chain.

Merger talks between the two publicly traded imaging center companieswere announced May 7. Although a deal is still far from definite,Medical Resources of Hackensack, NJ, is proposing a merger inwhich each share of NMR of America stock would be converted into0.6875 shares of Medical Resources common. The proposal is subjectto stockholder approval on both sides.

This is not the first time the two New Jersey imaging servicesfirms have tried to tie the knot. Merger talks in 1993 fell throughbecause of differing management philosophies (SCAN 11/3/93). Atthat time, Ernest DeSalvo was president and CEO of Medical Resources.His departure, along with Farrell's appointment as co-presidentwith Robert Adamson, and market conditions that cry out for industryconsolidation, increase the odds that the merger will be completedthis time around, according to Farrell.

"This would be a beautiful match," he said.

The two companies have a lot in common. Both own 18 imaging centers.Medical Resources operates 11 facilities in New York and New Jersey,making it the largest provider of freestanding imaging servicesin the region, Farrell said.

Both are also expanding their reach into Florida. Medical Resourcesowns seven centers in western Florida, three of which were acquiredthis month (SCAN 5/8/96). NMR of America expanded its reach intoFlorida last year. The Murray Hill, NJ, company acquired MorganMedical Holdings of Tampa Bay, FL, which operates four imagingcenters in Florida. NMR of America also owns six facilities inand around Chicago, a city in which it would like to expand.

Improved financial results by both firms also make Farrell optimisticabout the prospects of a merger. After two years of red ink, MedicalResources turned a $1.7 million profit on sales of $52 millionin 1995. NMR of America reported record profits in fiscal 1995.For the year ending in March, the company posted net revenuesof $18 million, with net income of $2.4 million. Joseph Dasti,CEO of NMR of America, was not available for comment on the proposedmerger.