Australia's largest e-health company, IBA Health, has raised its cash offer for British e-health software group iSoft to £166.3 million ($333.4 million), which it expects will scare off rival bidder CompuGroup of Germany.

If the bid is successful, the acquisition would make IBA the world's fourth-largest e-health group and the largest outside the US. IBA already holds more than 24 per cent of iSoft, which gives it bid a distinct advantage. The company expects a decision in its favour within two weeks.

CompuGroup had earlier trumped IBA's first bid with an all-cash offer of £160 million ($320.75 million), or 66 pence ($1.32) a share. IBA's new offer gives shareholders a choice; either 69p ($1.38) per share in cash or 1.65 IBA shares for every iSoft share, or a combination of both.

The scrip alternative represents an implied offer of 70.2p ($1.41) per share, based on IBA's 21 August share price of 92¢ (46p).

CompuGroup entered the fray five days before the UK High Court was to approve IBA's May deal, which had also secured the blessing of Computer Sciences Corp (CSC) that subcontracts work to iSoft on the £12 billion 'Lorenzo' patient database being developed for the UK's National Health Service. CSC can veto any change in ownership of iSoft.

Some analysts say that a CSC deal in July with CompuGroup, which gave the US company control of the Lorenzo software, may complicate the latest IBA offer. IBA and CSC had initially clashed over the original May takeover agreement, but reached a settlement in June, before CompuGroup's counterbid. IBA says that agreement still stands.

ISoft has said it will run out of money in November if it doesn't find a buyer. As of April, it had £90.1 million ($180.6 million) of debt. The Sydney-based IBA said Australia's Allco Equity Partners would finance its new offer by buying up to $240.7 million (£120.1) in IBA shares and notes.

IBA transmits financial and clinical data to general, specialist and allied health professionals, Medicare and private health funds, and provides health services to more than 5,000 primary care providers, 300 aged and community care facilities, 50 per cent of private hospitals, public hospitals and the Australian Defence Force.

Combined with iSoft, IBA will have a worldwide client list of 13,000. The merger is expected to significantly increase IBA's 2008 earnings per share before amortisation of acquisition-related intangibles, and save $27 million in costs by 2009.