Philips agrees to sell MedQuist stake to CBay Systems

Published: 05/22/2008

AMSTERDAM, THE NETHERLANDS and LONDON, UK - (HealthTech Wire) - Royal Philips Electronics (AEX: PHI, NYSE: PHG) (“Philips”) today announced it has reached an agreement to sell its approximate 69.5% ownership interest in MedQuist Inc. (Pink Sheets: MEDQ.PK) to CBay Systems Holdings (AIM: CBAY) (“CBay”) for USD 11.00 per share, or approximately USD 285 million (approximately EUR 185 million). The USD 11.00 per share purchase price represents a premium of 47% over the most recent trading price of MedQuist’s stock. The acquisition of the approximate 69.5% shareholding in MedQuist 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.

The sale of Philips’ stake in MedQuist is expected to close during the third quarter of 2008, and is conditional upon applicable regulatory approvals, approval by CBay shareholders at a general meeting of shareholders, and the fulfillment of specific closing conditions. In connection with this transaction, Philips will receive cash and a promissory note equivalent to approximately USD 7.50 per share, amounting to approximately USD 195 million (approximately EUR 125 million). The remaining per share consideration of approximately USD 3.50 per share will be paid to Philips in the form of a 7-year bond convertible into common stock of CBay. The financial results related to this transaction, which are expected to be immaterial, will be booked under “Discontinued Operations” in Philips’ third quarter 2008 results.

Today’s announcement follows a November 2, 2007 announcement, in which Philips indicated its intention to proceed with the sale of its approximate 69.5% ownership interest, as well as a July 6, 2007 announcement, in which Philips indicated it viewed its stake in MedQuist as a non-core holding.