CBay buys Philips unit for $287 m
SOURCE: Hindustan Times
DATE: May 22nd, 2008
Philip seem to have lost a lot of money on Medquest. Philips owns 70% of MedQuist (MEDQ.PK), a medical transcription company. Philips bought the company at $51; the stock now trades at $7. Philips announced in November 2007 that it was selling its stake, and MEDQ hired its own investment banker. Costa Brava and Newcastle each own more than 5% stakes, both at a cost of roughly $12. Newcastle got BOD representation in December 2007.
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In a deal somewhat resembling Tata Steel’s buyout of Anglo-Dutch Corus Group, CBay Systems, one of India’s largest medical transcription and business process outsourcing (BPO) companies in the healthcare field, has agreed sell a 53 per cent stake to private equity investors to help fund a $287-million (Rs. 1,238-crore) buyout of ailing Medquist, the world’s largest medical transcription company.
Cbay, founded by Indian entrepreneur Raman Kumar, will get $123 million from UK-based S.A.C. Private Capital Group (SAC) and US-based Lehman Brothers to buy out the Philips-controlled unit listed on the tech-heavy Nasdaq exchange.
Cbay Systems would pay a 47 per cent premium over Medquist’s market price of $ 7, Kumar said. SAC and Lehman have agreed to invest the sum in London-listed CBaySystems Holdings, the parent company of CBay Systems.
“They would have considerable influence in cBay Systems, and function as executive partners and financial sponsors to this deal,” said Kumar. This effectively means that the two investors would own the UK-listed company.
CBay’s board will be recast with six members coming from SAC, while six of the five present members would be retained in the board. Kumar would continue to be the CEO.
US-based Medquist has been in trouble for the last three years, and was de-listed some time back. CBaySystems Holdings would purchase the 69.5 per cent share in Medquist held by Dutch Koninklijke Philips Electronics N.V., the global electronics giant.
Headquartered in Mount Laurel, New Jersey, MedQuist provides a suite of healthcare technology and medical transcription services to more than 1,500 hospitals and large physician practices in the US. For the year ended 31 December 2007, MedQuist reported total revenues of $340.3 million, according to a Cbay Systems release.
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