Sydney, Aug 22, 2007 AEST (ABN Newswire) - IBA Health Limited (ASX: IBA) - Australia's largest listed eHealth company, today announced a revised cash offer of A$410.7 million (Pounds166.3 million) for iSOFT Group plc (iSOFT). The revised offer will have a scrip alternative.
IBA has also agreed to acquire approximately 56.6 million shares in iSOFT from existing shareholders representing 24.3% of the issued capital of iSOFT.
Under the revised offer, iSOFT shareholders will be entitled to receive:
- 69 pence cash for each iSOFT share; or
- 1.65 IBA shares for every 1 iSOFT share (the Share Alternative), an implied offer price of 70.2 pence for each iSOFT share based on AEP's subscription price under the share component of the AEP Investment of $1.05 per IBA share (61.5 pence for each iSOFT share at IBA's closing price of $0.92 on 21 August 2007); or
- A combination of cash and the Share Alternative based on the above terms.
The cash offer represents a 4.5% premium to CompuGROUP's offer of 66 pence for each iSOFT share on 20 July 2007.
Allco Equity Partners (ASX: AEP) will make a strategic cornerstone investment in IBA of up to A$300 million, conditional on completion of the revised offer.
The combination of IBA and iSOFT is expected to significantly increase IBA's FY2008 earnings per share before amortisation of acquisition related intangibles . Full run-rate annual cost synergies totalling approximately A$27 million (Pounds11 million), arising primarily from a reduction of overheads through combining infrastructure and premises, are expected to be realised in FY2009.
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.
The combined group will hold a key position in the NPfIT, one of the world's largest civilian IT projects with a total value of A$31 billion over the next 10 years. Contractual amendments to iSOFT's supply agreement to CSC in June 2007 has reduced the risk of NPfIT for iSOFT and strengthened its financial position over the next three years with approximately two thirds of CSC's licence payments to iSOFT being guaranteed through calendar based payments.
Gary Cohen, Executive Chairman, of IBA Health said, "The strategic logic for this merger remains compelling and the merits of the transaction are further endorsed through AEP's cornerstone investment. This merger of two leading healthcare IT companies will create one of the largest providers of health IT solutions in the regions from Europe through to Australasia. This is a continuation of our international strategy, started three years ago. Our revised offer will enable iSOFT shareholders to choose whether to accept cash or to accept IBA shares and benefit from the expected growth of the combined group.
It preserves key relationships with iSOFT customers and employees, ensures the LORENZO IP is retained and enhances the value of the combined IBA and iSOFT business."
The cash component of the revised offer will be financed through a combination of:
- IBA's existing cash resources;
- the net proceeds of the rights issue, which completed on 3 July 2007, to the extent of approximately A$140 million (Pounds59.2 million); and
- the proceeds of a cornerstone equity investment under which AEP will subscribe for up to A$300 million (Pounds121.5 million) through a combination of shares and Convertible Notes to be issued by IBA. AEP's commitment will vary depending on the extent to which iSOFT shareholders opt for the Share Alternative.
AEP has agreed to invest up to 19.9% of the diluted issued share capital of IBA (on the relevant subscription date) at a price of A$1.05 per IBA share up to a maximum of A$132 million. The balance of the AEP investment will be by way of Convertible Notes, convertible into IBA shares at any time on a one-for-one basis (adjusted for corporate events). IBA has agreed to seek shareholder approval to permit AEP to convert its Convertible Notes, as such a conversion is likely to result in AEP holding 20% or more of the issued capital of IBA. The issue price of the Convertible Notes will be equal to a 10% discount to the lower of $1.05 or the VWAP of IBA shares over the 20 trading days commencing the later of seven trading days post the revised offer announcement or two trading days following the posting of a revised scheme circular. To the extent that any Convertible Notes are not converted, such notes will be redeemed on the maturity date, which is five years after the issue of the notes.
AEP will be entitled to nominate directors to the board of IBA subject to AEP's ownership interest.
IBA will procure the refinancing of iSOFT's existing bank facilities, which are repayable upon a change of control, and the ongoing working capital requirements of the enlarged group, through committed new debt facilities of Pounds145 million (A$358 million) which have been arranged by ABN AMRO of which Pounds120 million ($296 million) has been underwritten by ABN AMRO and the balance of Pounds25 million (A$62 million) by AEP. The availability of the new debt facilities is subject to a number of conditions as set out in the attachment.
Marcus Derwin, Managing Director of AEP said, "The proposed investment suits AEP's investment mandate, which includes taking strategic stakes in public companies. AEP is attracted to the growth potential of the global healthcare IT sector and a combination of IBA and iSOFT is a compelling investment proposition."
Contact
Gary Cohen
Chairman
IBA Health Limited
Phone: +61 2 8251 6700
Email: gary.cohen@ibahealth.com
Media
Greg King
Communications and Business Development Director
IBA Health Limited
Phone: +61 413 621 111
Email: greg.king@ibahealth.com
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