The long-running saga surrounding the future of medical software firm iSoft could be nearing its end, after a prospective buyer for the British-headquartered company refused to increase its bid.
iSoft's much-delayed clinical software, Lorenzo, is a lynchpin of the NHS's £12bn IT modernisation drive, the National Programme for IT (NPfIT).
Recent months have seen a tussle for iSoft between two foreign IT firms — Australia's IBA and Germany's CompuGroup.
In May, IBA seemed certain to buy iSoft for £140m, despite a threat by CSC — the NHS contractor which is subcontracting iSoft — to block the sale. CompuGroup entered the fray in July with a valuation of £160m, but IBA hit back a week ago with an offer valuing the company at £166m, or 69p per share.
"IBA's cash offer represents superior value for iSoft shareholders compared with that of CompuGroup," read a statement released by iSoft on Wednesday. "iSoft has therefore withdrawn its recommendation of the CompuGroup offer and intends to recommend the IBA cash offer and proceed with the steps necessary to implement the revised IBA offer by way of scheme of arrangement."
The acceptance of IBA's offer means that iSoft will no longer be subject to auction under the auspices of the Panel on Takeovers and Mergers, as iSoft itself had suggested only six days ago.
"iSoft would have been an excellent complement to our international business activities, but CompuGroup does not intend to enter into a contest that would lead to prices and risks that are unreasonable," said CompuGroup's chairman Frank Gotthardt on Wednesday.
Ovum analyst Tola Sergeant said that CompuGroup would have been "a safer pair of hands for iSoft than IBA, which has a turnover of only about £30m and very little M&A experience."
"That said, given the number of twists and turns that we've already seen in the iSoft saga, we wouldn't rule out yet another third party bid for the company," added Sergeant.
iSoft has had a disastrous couple of years, becoming subject to multiple financial probes and seeing its share price fall as low as 32p. The company was also blamed for Accenture's withdrawal from NPfIT. Accenture had — like CSC — been subcontracting iSoft for much of its NHS IT work. However, the Lorenzo package has yet to materialise, and suggestions have been made that iSoft had oversold the timescale within which it could deliver the software.