MedQuist Inc. (OTC:MEDQ) announced today that it was considering a sale of the company in light of its previously-disclosed review of strategic alternatives shortly after Dutch Philips Electronics (NYSE:PHG) revealed that it wanted to sell its 70 percent stake in the medical transcription and document service provider. Shares in the company jumped over five percent on the news.

MedQuist has faced many problems recently after a series of investigations by the SEC and Philips Electronics threat to sell its 70 percent stake at a loss. The company quickly resolved its problems with the SEC and purchased all of the software and licenses that it needs from Philips Electronics. The company is now current in all of its SEC filings and owns all of the front-end software that it uses with clients to accept transactions.

Now, MedQuist is turning its attention to the possibility of a sale. CEO Howard Hoffman noted in a recent conference that there are three investment groups that have a five percent or greater ownership stake in the company besides Philiips, so "anything is a possibility" regarding future ownership. Since the 70 percent stake owned by Philips could likely be sold on the cheap, there are many financial buyers that may be willing to take a stab at the company.

Strategic buyers may also surface as continued consolidations are still likely in the fractured medical transcription industry. MedQuist's front-end speech recognition technology may also be something that other companies may eye. "I think radiology will convert completely to front-end and some of the medical specialties," said Hoffman. And at these fire-sale prices, there is sure to be at least some interest by strategic players.

In the end, the company is well positioned to sell itself at a substantial premium. The majority shareholder is determined to sell its stake at any price to write-off the investement while the company has resolved all of the major issues it has faced with the SEC that could have been hurdles to any transaction. And finally, there is a lot of potential interest from strategic and financial buyers. Combined, these factors make MEDQ a stock worth watching!

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