CBay Systems to purchase stock in medical transcription software provider MedQuist. Source: Medical Transcription Services of America

Royal Philips Electronics has reached an agreement to sell its approximate 69.5 percent ownership interest in MedQuist to CBay Systems Holdings for approximately $285 million (€185 million), or $11 per share.

The $11-per-share purchase price represents a premium of 47 percent more than the most recent trading price of MedQuist’s stock, according to Philips.

The acquisition of the approximate 69.5 percent shareholding in the London-based MedQuist will complement CBay Systems Holdings’ existing portfolio of businesses in medical transcription, healthcare technology and healthcare financial services, including CBay Systems & Services, CBay Systems Private and Mirrus Systems.

Philips said the sale of its stake in MedQuist 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.

In connection with the transaction, Philips said it will receive cash and a promissory note equivalent amounting to approximately $195 million (approximately €125 million). The remaining per share consideration will be paid to Philips in the form of a seven-year bond convertible into common stock of CBay. The financial results related to the transaction, which are expected to be immaterial, will be booked under Discontinued Operations in Philips’ third quarter 2008 results, according to the company.