IBA Health looks set to win the battle for troubled NHS software supplier iSoft after rival CompuGroup said it will not raise its latest offer.

IBA last week raised its bid for iSoft to £166.3m, trumping CompuGroup’s earlier price of £160m. The Australian firm also owns 26 per cent of iSoft shares, allowing it to block CompuGroup from gaining 75 per cent shareholder approval for its bid.

CompuGroup said it will not top the new bid, but it will retain the right to increase the offer if any other firm were to bid for iSoft.

‘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,’ said CompuGroup chairman Frank Gotthardt.

‘This would not create value for our shareholders.’

IBA said iSoft would now recommend shareholders to accept its bid and it expects the deal to go ahead.

iSoft is developing software that is critical to the £12bn National Programme for NHS IT but it has been hit by delays. CompuGroup’s bid would have included the sale of the software to Computer Sciences Corporation (CSC), which delivers 60 per cent of the National Programme.

Ovum analyst Tola Sargeant maintains that CompuGroup would have been a ‘safer pair of hands’ for iSoft.

‘IBA has a turnover of about £30m and very little merger and acquisition experience,’ she said. ‘But CompuGroup is sensible not to get into a bidding war for troubled iSoft.’