The announcement sent shares in, Manchester, UK-based iSoft and Banbury, UK-based Torex tumbling some 7% and 9.4% respectively after the tribunal reacted to concerns from an Australian rival firm IBA Health that the 700m pounds ($1.2bn) merger would be anti-competitive. It is very possible that the proposed deal will now be handed to the Competition Commission for a final decision.
The timing of the announcement could not be any worse for the companies, which are currently bidding for contracts within the Department of Health’s overhaul of the IT services within the National Health Service. iSoft is bidding as a national application service provider on the Integrated Care Records Infrastructure under EDS, as well as a local service provider to regions such as the northeast and Yorkshire. The Department of Health has committed to award the LSP contracts by the end of December 2003.
Competing for a larger share of this NHS bounty was one of the key reasons behind the merger, which was announced in September. In a statement issued then, the companies said they would: provide the necessary expertise and experience to participate more fully in the 2.3bn pound ($3.9bn) NHS modernization program. The merged group will be better placed to service the requirements of the National Application Service Providers and the LSPs in the five geographic regions in England.
Under terms of the proposed deal, iSoft will take over its larger and more established rival Torex in an all-share deal that will give Torex shareholders a 44% stake in the new business that will retain the iSoft name. Despite the ruling and resulting share slump, the two companies said they plan to continue with the merger.
This article is based on material originally produced by ComputerWire.
