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EXHIBIT 21
PHILIPS ELECTRONICS AGREES TO ACQUIRE
60 PERCENT OF MEDQUIST SHARES AT $51 PER SHARE
- Partnership with Philips Creates
New Technology Platform for Transcription Services -
Marlton, N.J., and Amsterdam, Netherlands - - May 23, 2000 - - MedQuist, Inc.
(Nasdaq: MEDQ) and Koninklijke Philips Electronics NV of the Netherlands (AEX:
PHI, NYSE: PHG) announced today that they have entered into an agreement whereby
Philips will make a tender offer for approximately 60 percent of MedQuist's
fully diluted common stock at a cash price of $51 per share. The transaction is
subject to Philips acquiring 60 percent of the fully diluted shares of common
stock of MedQuist, as well as the expiration of the Hart-Scott-Rodino waiting
period and other customary conditions. It is expected that after completion of
the transaction MedQuist's shares will continue to trade on NASDAQ under the
symbol "MEDQ".
MedQuist is a U.S.-based provider of outsourced medical record transcription
services with sales of approximately $330 million in 1999. Philips' investment
is intended to lead to the transformation of MedQuist into a multinational,
technology-based medical document services provider over broadband networks,
with accelerated growth. MedQuist plans to roll out Philips' speech and other
technology, enabling significant productivity improvements in the direct
conversion of dictated medical records into written text.
Philips Medical Systems is a global leader in diagnostic imaging and services,
incorporating advanced x-ray, magnetic resonance, computed tomography,
ultrasound and imaging information systems to provide the data necessary for the
most effective patient care. MedQuist occupies a strong adjacent position in the
hospital's information chain.
"This acquisition moves us further into healthcare services, which is in line
with our stated strategy, and provides us with a significant growth opportunity,
as well as leveraging our speech technology capability," said Cor Boonstra, CEO
of Philips. "MedQuist has a market leadership position and a strong management
team which enables it to become an effective early adopter of automated
dictation. We have confidence in the current management team's ability to
continue to drive MedQuist forward."
David A. Cohen, Chairman and Chief Executive Officer of MedQuist said, "We are
delighted to have Philips as our partner as the combination of our client base
and their world-class technology and experience is extremely powerful. As a
result of this partnership we expect to introduce Philips' speech and other
technologies to our 2,400 U.S. healthcare accounts, and Philips anticipates
accelerating our existing plans to expand into Europe, where Philips Medical
Systems and Philips Speech Processing have strong existing hospital
relationships."
Mr. Cohen continued, "During the coming year we will utilize Philips
technologies to begin the transition to our new digital transcription platform,
via regional data centers, providing us with additional growth opportunities,
generating revenue and cost synergies, and enabling us to enter important new
markets. Based around a small number of large regional data centers, this new
technology will create additional capacity, allowing us to take advantage of the
significant continuing growth in our market, as well as the opportunity to
access new revenue sources such as coding and data mining. With Philips as our
technological partner and major shareholder, we are confident in our ability to
undertake this important step in the future of our company."
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Mr. Cohen added, "The benefits of this transaction provide us with a real
opportunity to use state-of-the-art and best-of-breed technology to expand our
business and become a leader in the provision of a much wider area of
technological services to the healthcare sector. The transaction structure we
have agreed also allows MedQuist shareholders to realize a significant premium
over the recent trading price for the majority of their holdings, while sharing
in the additional long-term growth to be generated once our transition is
complete."
The two companies also plan to expand MedQuist's current range of outsourced
transcription services to include in-house speech recognition software sales and
Application Service Provider models.
As part of the transaction, MedQuist and Philips have also entered into a
license agreement for the joint development and implementation of speech
recognition technology. The more efficient use of MedQuist's transcription
workforce, via the use of Philips Speech Processing's technology, and the
recruitment of more widely available "editors", is anticipated to lead to
accelerated revenue growth (already 20% per year on average), due to the fact
that growth has been limited by the availability of qualified transcriptionists.
Consequently, Philips and MedQuist do not expect any workforce reductions as a
result of the speech technology rollout, which will take place between 2001 and
2005.
UBS Warburg LLC acted as financial advisor to MedQuist and Goldman Sachs
International served as financial advisor to Royal Philips Electronics.
For further information, please contact:
For Philips:
Ben Geerts, Corporate Communications, tel: +31 20 5977215
Email: [email protected]
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For MedQuist:
John Emery, Chief Financial Officer, tel: 856-810-8000, x-4418
Email: [email protected]
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MedQuist is the leading U.S. provider of electronic medical transcription
services, the process by which dictation is converted into a medical report.
Through the company's nationwide network of more than 8,000 trained
transcriptionists, broadband telecommunication systems and interface with health
care providers' computer systems, MedQuist shortens its customers billing cycles
and reduces overhead and other administrative costs.
Philips Medical Systems is a leading supplier of diagnostic imaging systems and
related services worldwide, represented in more than 100 countries and employing
11,800 people. A worldwide network of research and development and sales and
service organizations backs Philips' products. Philips Medical Systems is part
of Royal Philips Electronics, one of the world's largest electronics companies.
Additional information on Philips Medical Systems can be obtained by accessing
its homepage at http://www.medical.philips.com.
Royal Philips Electronics of the Netherlands is one of the world's biggest
electronics companies and Europe's largest, with sales of $33.5billion (EUR 31.5
billion) in 1999. Its 226,900 employees in more than 60 countries are active in
the areas of lighting, consumer electronics, domestic appliances, components,
semiconductors, medical systems, and IT services (Origin). Philips is quoted on
the NYSE (symbol: PHG), London, Frankfurt, Amsterdam (symbol: PHI) and other
stock exchanges. News from Philips is located at www.news.philips.com.
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The agreement obligates Philips to commence the tender offer within seven
business days and contains customary termination provisions. Philips and
MedQuist have also entered into a Governance Agreement, under which Philips will
nominate a majority of directors to MedQuist's board. Mr. Cohen will remain
MedQuist's Chairman of the Board and Chief Executive Officer, and John A.
Donohoe will continue as President and Chief Operating Officer and a member of
the Board. The Board will also consist of three independent directors currently
on MedQuist's Board and who will serve as a supervisory committee to review
transactions between Philips and MedQuist. This agreement also includes
restrictions on Philips' ability to purchase and sell MedQuist shares.
The 60 percent of MedQuist's fully diluted shares to be acquired by Philips in
the transaction for $51 per share in cash comprises 57 percent to be acquired
pursuant to the tender offer to all shareholders and 3 percent which Philips has
agreed to acquire directly from a number of the senior management of MedQuist.
The shares to be acquired directly from senior management represent
approximately 37 percent of their combined holdings, and those involved have
agreed not to sell their remaining holdings for at least two years. The
transaction is subject to MedQuist shareholders tendering sufficient shares such
that Philips will be able to acquire at least 60 percent of MedQuist's fully
diluted common stock.
This press release contains certain statements by or relating to MedQuist and
the transaction with Philips that are neither reported financial results nor
other historical information. These statements are forward-looking statements
within the meaning of the safe-harbor provisions of the U.S. federal securities
laws, and include statements of market estimates, growth and expansion plans and
opportunities, potential revenue and cost synergies, and the benefits of new
technologies. These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
expressed in the forward looking statements. Many of these risks and
uncertainties relate to factors that are beyond MedQuist's ability to control or
estimate precisely, including, without limitation, future market and economic
conditions; the behavior of other market participants; MedQuist's ability to
implement and achieve market acceptance of new technology platforms, including
speech processing technology; MedQuist's ability to successfully integrate
acquired businesses and achieve anticipated synergies; MedQuist's ability to
recruit and retain qualified transcriptionists and other employees; the impact
of new services or products or the demand for MedQuist's services; and
MedQuist's ability to expand its customer base. These and other risk factors are
detailed in MedQuist's reports, including its Form 10-K for the year ended
December 31, 1999 filed with the SEC. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date of
this press release. MedQuist does not undertake any obligation to publicly
release any revisions to these forward-looking statements to reflect events or
circumstances after the date of these materials.
The tender offer described in this announcement for outstanding shares of common
stock of MedQuist has not yet commenced, and this announcement is neither an
offer to purchase nor a solicitation of an offer to sell securities or any
recommendation with respect to the tender offer. The tender offer will be made
only through the Offer to Purchase and related Letter of Transmittal. We urge
MedQuist shareholders to read the following documents, when they become
available, regarding the tender offer because they contain important
information: (i) Philips' Tender Offer Statement on Schedule TO, including the
Offer to Purchase, Letter of Transmittal and Notice of Guaranteed Delivery; and
(ii) MedQuist's Solicitation/Recommendation Statement on Schedule 14D-9. These
documents will be filed with the Securities and Exchange Commission when the
tender offer commences. When these and other documents are filed with the SEC,
they may be obtained free of charge at the SEC's website at www.sec.gov.
