The sale is expected to close in the third quarter of 2008, pending customary regulatory and shareholder approval.
MedQuist executives said MedQuist would continue to operate as an independent company.
Annapolis, Md.-based CBaySystems is a publicly traded, AIM listed holding company with a portfolio of investments in medical transcription, healthcare technology, and healthcare financial services.
Philips announced in November last year that it intended to sell ownership interest in MedQuist, which prompted MedQuist executives to question whether the sale would be in the best interest of its shareholders. In collaboration with Philips, MedQuist sought acquisition proposals from various parties. However, the MedQuist committee formed to evaluate the proposals rejected them as insufficient for a sale of the company.
Among the proposals was one by CBaySystems Holdings to either acquire 100 percent of MedQuist at the same per share price and on substantially the same terms as offered to Philips or to acquire up to 100 percent of the company in a merger transaction which offered the MedQuist shareholders - other than Philips - the option to receive either the same consideration offered to Philips or to remain shareholders of MedQuist.
Over the past year, MedQuist has faced numerous problems. It paid $7.5 million to settle a customer class action suit in which plaintiffs alleged that the company overcharged certain non-federal governmental hospitals and medical centers for transcription services.
MedQuist also saw the resignation of three independent board members who disagreed with the company over how to handle Philips' planned sale of stock.
"Now that the sale evaluation process is concluded," said Howard Hoffmann, president and CEO of MedQuist, "We can focus all of our energy and talent on growing top line revenue and bottom line performance through the continued development and delivery of innovative, high quality and cost effective technology and services solutions for our customers."