MDI board rejects Raytel tender offer

Imaging services firm Raytel'stender offer for Medical Diagnostics has been rejected by MDI'sboard of directors. MDI has also filed suit against Raytel andimplemented a stockholders' rights package to derail Raytel'sbid.

Raytel, of San Mateo, CA, announced last month that it was preparingto launch a tender offer for all outstanding shares of MDI, ofBurlington, MA (SCAN 12/14/94). On Dec. 16, MDI's board of directorsresponded to the offer by rejecting Raytel's bid and urging thecompany's stockholders not to tender their shares to Raytel.

MDI's board adopted two additional strategies in its defense.It established a stockholders' rights plan intended to preventRaytel or any third party from taking control of MDI without negotiatingfirst with the board to secure a deal that is fair to shareholders.It also filed a lawsuit in U.S. District Court of Delaware seekingto enjoin Raytel from carrying out its tender offer.

A hearing on the lawsuit is expected to take place in January.Meanwhile, Raytel has until Jan. 3 to complete the tender offer,although the deadline may be extended.