Corning Far Outbids Rival in Move to Acquire Damon : Health: Offer of more than $370 million, or $23 a share, is 44% higher than National Health’s price. At stake is key market share in clinical labs industry.

Vying for market share in the clinical laboratories industry--where bigger is considered better--No. 2-ranked Corning Inc. on Monday dramatically outbid No. 3-ranked National Health Laboratories for a Massachusetts-based competitor.

Corning offered more than $370 million, or $23 a share, to acquire Damon Corp., besting National Health’s $16-a-share offer last week by 44%.

The news sent Damon stock soaring $5.875 to close at $22.625 on the New York Stock Exchange.

“Corning’s willingness to bid a substantial premium over the NHL transaction reflects the seriousness of our purpose,” E. Martin Gibson, chairman and chief executive of Corning, wrote in a letter to Damon.

Damon would have to pay National Health $18 million to break their definitive purchase agreement. But because Corning’s price is $112.7 million above National Health’s offer of $257.6 million, analysts said Damon probably will accept Corning’s bid.

Damon said Monday that it was “reviewing” Corning’s proposal.

Though the lab industry faces cutbacks in Medicare and Medicaid--as well as the uncertainties of the Clinton Administration’s health reform efforts--analysts say larger companies will be better positioned to deal with the changes. They predict that small, independent labs will be bought by larger companies that can more easily absorb the industry’s high fixed costs.

“This is just really the beginning of a rapid consolidation of the industry,” said Damon Brundage, an analyst with Paine Webber Inc.

Damon stockholders, some of whom had filed four separate lawsuits in Delaware Chancery Court to block the sale to La Jolla-based National Health, welcomed Corning’s offer. Many had considered National Health’s offer to be significantly below what the stock was worth.

Although Corning’s high offer was intended to deter anyone from bidding higher, some analysts said a bidding war could break out.

“Damon is really the last middle-sized piece,” said Erik Wiberg, an analyst with Hambrecht & Quist. “This is your one chance at becoming larger a lot faster.”

National Health would not comment on the Corning offer.

Corning Lab Services Inc.--which is based in Corning, N.Y., and operates 40 clinical, pharmaceutical and environmental labs--ranks behind only SmithKline Beecham in terms of revenue.

Acquiring Damon’s 13 U.S. labs and one in Mexico City would vault National Health past Corning. “I think what Corning has done has kept a prized asset out of one of their competitors,” Brundage said.

Corning stock fell 12.5 cents to $34.75 in NYSE trading, while National Health lost 25 cents to close at $18.125.