NHS software supplier iSoft is advising shareholders against a takeover from Australian software firm IBA Health, in favour of a rival bid from German company CompuGroup.

Just three weeks ago more than 97 per cent of shareholders voted in favour of the IBA bid, which valued the software company at £142m.

But CompuGroup, a leading European e-health firm, stepped forward with a surprise bid early this morning (20 July 2007) worth £160m.

‘CompuGroup’s offer represents superior value for iSoft shareholders compared with the offer by IBA,’ said iSoft’s acting chief executive John Weston. ‘It underlines the fundamental value inherent in the business, and the strengthening position which the management team has brought over the last year.’

iSoft's Lorenzo software is a critical part of the £12bn National Programme for NHS IT (NPfIT), but the development has been delayed several times and was cited as a factor in consulting giant Accenture's abadonment of its contracts last year.

CSC, which now oversees 60 per cent of the national programme, initially blocked the sale of iSoft, in part to ensure the delivery of Lorenzo.

CompuGroup says it has reached agreement with CSC on a mutually satisfactory solution which will enable CSC to take full control of Lorenzo if necessary while giving greater certainty to CompuGroup over iSoft’s on-going operations.

In addition, CSC has agreed that it will not withhold its consent to the change of control of iSoft.

‘We are delighted that iSoft has decided to recommend our proposed offer,’ said CompuGroup chief executive Frank Gitthardt.

‘CompuGroup has agreed with CSC a mutually attractive solution to service the National Programme for IT which (while) ensuring we maintain our position as one of the world’s leading healthcare software companies.’