It’s a battle royale in Melbourne’s diagnostics space, as Capitol Health tries to swallow rival operator Integral Diagnostics.

Capitol provides diagnostic imaging services in Victoria through its own chain of clinics. It has an investment in diagnostic tech in the US and a partnership to enter the Chinese market.

Integral on the other hand is the slightly bigger company, with a market cap of $274 million compared to Capitol’s $245 million. It offers similar services in Victoria, Queensland and Western Australia.

Capitol (ASX:CAJ) is offering 6.9 of its own shares and 36c cash for Integral (ASX:IDX).

That’s an implied value of $2.46 a share for Integral, or a market cap of $357 million. Before the bid, Integral shares were trading between $1.80 and $1.90.

“Integral’s strong hospital network, combined with Capitol’s expertise will create a first-class healthcare organisation,” said Capitol managing director and CEO Andrew Harrison.

“We look forward to engaging with Integral’s highly regarded doctor partners and associates.”

Capitol and Integral have been in talks this year about a merger, and the suitor already has four shareholders on board, giving it control of 19.55 per cent of Integral.

But the offer came from Capitol alone. Integral is yet to respond.

Integral shares shot up 26 per cent on Wednesday morning to $2.38, while Capitol was up 4 per cent to 30.5c.