iSoft u-turn on IBA bid

Medical software company iSoft has u-turned on a takeover bid from the Australian group IBA, and is now recommending a 160 million pound offer from Germany's CompuGroup.

CompuGroup made its surprise offer early last Friday, pushing iSoft's shares up more than seven percent at the time of writing, to 59p a share. During a tumultuous year for the company, whose Lorenzo software is integral to the ongoing IT overhaul of the NHS, the share price has gone as low as 32p. CompuGroup's all-cash offer places a 19 percent premium on IBA's offer, which shareholders approved earlier this month, and values iSoft at 160 million pounds.

"CompuGroup's offer represents, in the view of the board, superior value for iSoft shareholders compared with the offer by IBA," said iSoft chairman and acting chief executive, John Weston, last week. "It underlines the fundamental value inherent in the business, and the strengthening position which the management team has brought over the last year. We therefore have no hesitation in recommending it."

Frank Gotthardt, CompuGroup's president and chief executive, said he was delighted at the iSoft board's recommendation and said the fit between the two companies was "strong with complementary geographic footprints and significant opportunities to leverage industry know-how and technical expertise across the enlarged group leading to significant value creation".

The late delivery of Lorenzo has been widely identified as a thorn in the side of the National Programme for IT (NPfIT), causing the departure of consulting giant Accenture from the project and quite possibly contributing to the decision of NPfIT chief Richard Granger to step down. Last year insiders told ZDNet Australia's sister site ZDNet.co.uk that iSoft had oversold its delivery timetable to the NHS, and the company has also faced several financial probes over its dealings.

David Meyer reported for ZDNet UK from London