The planned £140m takeover of IT group ISoft by Australian rival IBA Health has hit a roadblock after Isoft’s main contractor refused to give its backing to the deal.
Greg King, IBA’s Sydney-based head of business development, said Isoft had received a letter from Computer Sciences Corporation of the US, saying that that it would not consent to a change of control at Isoft.
CSC is Isoft’s partner in a £6bn IT upgrade for UK’s National Heath Service.
He said CSC had not given any reasons for its move and both Isoft and IBA were seeking clarification. He added that management was perplexed by CSC’s decision, since IBA had been working well with CSC for the last few months.
Mr King said: “We’ve shown them our package for regenerating Isoft, we’ve guaranteed not to disrupt the current program, promised to retain the current management. For its part, Isoft took us to regular meeting at the NHS, helped us present our business case and establish our credentials.
He added that the two companies were working on complex projects and while he could not say there were not issues that needed resolving, they were not significant barriers.
IBA had no plans to withdraw its bid but were hoped to resolve any issues.
“CSC has been good at taking advantage of Isoft’s downfall when it was penalised by the market for accounting irregularities,” Mr King said. “When Isoft needed help it put in stepping rights for development, when Isoft needed refinancing, it required that control could not change without its consent.”
Isoft shares plunged 19 per cent in early London trading to 41p. 2In Sydney, IBA fell 2.5 cents or 2.16 per cent to A$1.13 before being halted.
Under the terms of the recommended deal, which was launched on May 16, Isoft investors would receive 1.1 shares in IBA for each share in the UK group they own, equivalent to 58.1p a share.
IBA is the largest healthcare software provider in Australia, providing IT services to clinics, hospitals and care homes in 22 countries, although it has no clients in the UK.