IBA finally wins Isoft?

Yesterday CompuGroup withdrew its bid for Isoft meaning that the 69p bid from Ozzie IBA can be recommended by the Isoft board at tomorrow's EGM. I could have written my own critique of this but my ex-colleague Tola Sargeant wrote it for me on the Holway@Ovum Hotnews service yesterday. Indeed Tola (who I would guess is now the UK's leading expert on the NHS IT project) was widely quoted for the views expressed.

Holway@Ovum Hotnews
11:00 IBA set to win bidding war for iSoft
Tola Sargeant

Australian healthcare application company IBA Health looks set to win the bidding war for iSoft after German rival CompuGroup said today that it would not be increasing its cash offer for the company of 66 pence per share. However, CompuGroup has reserved the right to increase its offer if a third party (other than IBA) announces a competing offer for the beleaguered UK software provider.

CompuGroup's Chairman Frank Gotthardt said: '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'.
In response, iSoft said in a statement that IBA's cash offer represents superior value for shareholders and that it has therefore withdrawn its recommendation of the CompuGroup offer. It now intends to recommend the IBA cash offer and proceed with the steps necessary to implement it by way of a scheme of arrangement.

The news follows iSoft's announcement last week that it was planning to hold an auction for the company had the 'competitive situation' continued to exist between IBA and CompuGroup. IBA increased its offer for iSoft to 69 pence per share (or 1.65 new IBA shares) last week after an Australian private equity firm, Allco Equity Partners, agreed to invest up to £122m in IBA should the deal go ahead. IBA has already acquired a 25.6% stake in iSoft from existing shareholders.

Comment: After the distraction of a bid from CompuGroup and the promised spectacle of an auction for iSoft, we are almost back to where we started. Today, IBA once again looks set to be the new home of iSoft. But now it will be paying 69 pence per share in cash rather than its original all-share bid of 1.1 IBA shares for each iSoft share, which valued iSoft at 54.7 pence per share. While that is good news for iSoft shareholders, it is not quite as good news as the auction that had been proposed, which led iSoft's shares to climb to a 12-month high of 73 pence yesterday. This morning iSoft's shares are, unsurprisingly, back to 69 pence.