IBA ups offer in iSoft takeover battle
Australian e-health group IBA has re-entered the tug of war for UK software company iSoft with a revised takeover bid.
IBA is now offering iSoft shareholder 69 pence per share in cash or an exchange of 1.65 IBA shares, valuing the UK company at AU$410.7 million. IBA also announced today it has already acquired around 23.4 percent of iSoft from its existing shareholders -- some 56.6 million shares.
"The two companies have complementary geographical footprints and product portfolios, and it is expected that considerable revenue growth opportunities can be created through cross-selling a larger product portfolio to a broader customer base.
"The combined group will also be able to benefit from its increased offshore IT development resources and other economies of scale, which are expected to enable it to improve margins," IBA said in a release to the Australian stock exchange.
iSoft has made headlines in the UK for its involvement in the National Programme for IT (NPfIT), a multibillion pound plan by the nation's government to overhaul the NHS's IT systems. iSoft is contracted to provide a software program named Lorenzo to the NPfIT, but the delivery has so far been beset by delays.
Should the deal go ahead, IBA said it expects to realise savings of AU$27 million in its full year's 2009 earnings by reducing overheads, combining infrastructure and premises.
Allco Equity Partners (AEP) has agreed to become a "significant cornerstone shareholder" should the takeover be concluded, providing financing of around AU$300 million to IBA through a wholly owned subsidiary.
IBA has had its sights set on acquiring the beleaguered iSoft for some time and recently seemed to be edging closer to acquiring iSoft.
However, last month, a a surprise u-turn saw iSoft's board recommend shareholders accept a rival 160 million pound offer from German company CompuGroup.
Under CompuGroup's bid, shareholders were offered 66 pence per share -- 4.5 percent less than IBA's proposal. Without a significant injection of cash, it's thought iSoft will no longer remain solvent.