Philips sells majority stake in medical transcription company to CBay
23 May 2008
Royal Philips Electronics announced on Thursday that it has reached an agreement to sell its approximate 69.5 per cent ownership interest in medical transcription company MedQuist Inc. to CBay Systems Holdings for $11.00 per share, or approximately $285 million.
The acquisition is expected to close during the third quarter and is conditional upon applicable regulatory approvals, approval by CBay shareholders at a general meeting of shareholders, and the fulfillment of specific closing conditions.
The purchase price represents a premium of 47 per cent over the most recent trading price of MedQuist's stock, before it was delisted in 2004 after US authorities launched an investigation into whether it had violated laws in connection with the provision of medical transcription services. It has since paid damages to settle several lawsuits against it.
These included suits related to charges it overcharged hospitals for transcription services and a case brought by shareholders who accused it of issuing misleading information that inflated the stock price.
This purchase will complement CBay Systems Holdings' existing portfolio of businesses in medical transcription, healthcare technology, and healthcare financial services, including CBay Systems & Services Inc, CBay Systems Private Ltd. and Mirrus Systems.
CBay will pay Philips in cash and a promissory note equivalent to about $7.50 per share. The remaining $3.50 per share will be paid in the form of a seven-year bond convertible into common stock of CBay, Philips said.