Management Toolkit

iSoft board recommends surprise bid

David Meyer ZDNet.co.uk

Published: 20 Jul 2007 15:00 BST

In an abrupt about-turn, medical software company iSoft has advised its shareholders against a takeover offer from the Australian group IBA, instead recommending a bid from German company CompuGroup.

CompuGroup made its surprise offer early on 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 £160m.

"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, on Friday. "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.co.uk that iSoft had oversold its delivery timetable to the NHS, and the company has also faced several financial probes over its dealings.