Nichols Institute Plans Stock Sale for Acquisitions

Nichols Institute, which provides medical diagnostic-testing services to hospitals, is hoping to build a $30-million war chest for future acquisitions through a public stock offering.

The San Juan Capistrano company said Thursday that it has filed a registration statement with the Securities and Exchange Commission for a secondary offering of 1.77 million shares of its common stock.

Nichols is offering 850,000 shares, worth about $13.5 million based on Thursday’s closing price of $15.875 per share on the American Stock Exchange. An additional 917,032 shares will be offered by current security holders, including 489,911 shares that the company says will be acquired immediately before the sale by its senior noteholders.

Nichols officials said that proceeds from the offering will not be used to repay company debts, estimated at $34.5 million as of March 31.

“The proceeds will be used for possible future acquisitions in the area we specialize in and for general corporate purposes,” company spokeswoman Marilyn Hauge said.

She added that the SEC has indicated that the offering will probably occur in the last week of July, closing in early August.

Kidder, Peabody & Co. in New York and William Blair & Co. in Chicago are co-managing underwriters of the offer and have an option to buy up to 250,000 shares.

Nichols’ last public offering was in July, 1989, when the company sold 1.6 million common shares for $11.9 million, Hauge said.

The company, which had 1989 revenue of $141.3 million, has been aggressively expanding its operations through internal growth and mergers and acquisitions in several states. Its latest acquisition--its sixth since 1988--involved the purchase of Los Gatos-based Associated Laboratories Inc. for $4.5 million in cash and stock.