Kirschner Medical Corp. jilted one suitor yesterday and began courting another, a large health care company that would end up owning 57 percent of Kirschner stock under a proposed merger.
In an action that apparently surprised some investors and analysts, the Timonium orthopedic company broke off merger negotiations with Henley International Inc., then said it would buy Sutter Corp., a subsidiary of Columbia Hospital Corp., based in Fort Worth, Texas.
Kirschner would pay for Sutter by issuing common shares of stock to Columbia, which would have a majority interest in Kirschner.
"I'm in shock. I kind of feel like the groom that got stuck at the altar," said Peter M. Graham, executive vice president of Henley, who was to meet Kirschner officials in Houston yesterday to complete a merger agreement.
Instead, Kirschner telephoned Henley executives before working hours yesterday to say the deal was off, Mr. Graham said.
A proposed merger with Sutter Corp. of San Diego was better, said Kirschner Chief Executive Officer C. Scott Harrison, because it left Kirschner independent, with the same management and greater growth opportunities.
"I think it is a very different deal than with Henley. . . . This is the purchase of a synergistic company that I think will allow Kirschner to grow more rapidly," he said.
Sutter, with revenue of $25 million last year, is best known for its continuous passive motion device, which is strapped to a leg after surgery to help move the muscles back in place and help a knee heal more quickly.
Kirschner, with income of $4.2 million last year on $71.2 million in sales, makes replacement joints, and wires used to reconnect broken bones.