Acquisition by Tokos Concluded : Growth strategy: The new subsidiary is expected to win FDA approval to market a uterine-monitoring device for detection of pre-term labor.

Tokos Medical Corp. Tuesday concluded a $31.4-million acquisition of a small Atlanta-based firm that it hopes will be the first to win federal approval to market a uterine-monitoring device to detect pre-term labor.

The completion of the merger with Physiologic Diagnostic Service, first announced in June, was delayed pending completion of a Federal Trade Commission review of the deal’s antitrust implications. Tokos said the FTC completed its investigation Friday without taking any action.

Tokos officials said the combination gives Tokos a solid foundation for growth because the company now will be able to aggressively market a device for use by women with a history of pre-term labor. In addition, the company hopes to win other Food and Drug Administration approvals for use of the monitoring device.

“It will . . . enable us to expand the approved FDA indications for our home uterine activity monitors and enhance our ability to obtain broader reimbursement coverage of our pre-term labor management services,” Tokos Chairman and Chief Executive Officer Robert F. Byrnes said in a prepared statement.

Wall Street reacted favorably to the news of the merger. Tokos’ stock closed at $11.625, up $1.625 in heavy over-the-counter trading Tuesday. Still it is trading below its March initial offering price of $12 and its 1990 high of $16.50.

“The rebound in the stock price is pretty much replacing the decline (in Tokos’ stock price) that occurred when the FTC began its investigation,” said Dorothy Ryan, senior health services analyst with Robertson Stephens & Co., a San Francisco-based securities brokerage.

Tokos acquired all of PDS’s 2.7 million outstanding shares. PDS, which provides home uterine activity monitoring for pregnant women at high risk of premature birth, becomes a wholly owned subsidiary of Tokos.

While PDS is an unprofitable company, Ryan said its acquisition by Tokos is a strategic coup because the deal is expected to provide Tokos access to the first product with federal authorization to be marketed for detecting the onset of pre-term labor.

In April, PDS received a recommendation of marketing approval from the FDA’s medical advisory panel, meaning that the clinical tests of its monitor have satisfied the FDA’s criteria for safety and effectiveness. The panel recommendation makes final FDA approval of the device likely.

For many years some physicians have prescribed similar devices for women with high-risk pregnancies to help them know when to use drugs and other methods to prevent premature deliveries.

However, the previous inability of Tokos and other companies to obtain FDA approval of their devices had raised skepticism in the medical community about the effectiveness of the technology, and in some cases insurance companies had refused to pay for the service.