Former iSoft chief could still spoil takeover deal with rival bid

The founder and former chief executive of health technology company iSoft, Gary Cohen, has signalled that he could make a bid to take back control of the company, despite iSoft receiving a takeover bid from US computer giant Computer Sciences Corporation.

Cohen left iSoft in September after the company reported a disastrous $382 million loss.

In the six months leading up to his departure, iSoft’s shares had plunged 73%, as the company battled high debt and deteriorating conditions in the British health market, where it has several key contracts.

The board of iSoft has been looking to orchestrate a sale of the business for some months, and yesterday recommended shareholders accept a deal that would value the company at about $180 million, and see CSC repay about $300 million worth of debt.

While Cohen only owns 5% of the company, he retains pre-emptive rights over a 15% stake owned by major investor Oceania Capital Partners.

This puts him in the powerful position of being able to have first right of refusal over these shares, and the effective ability to block a takeover deal.

Cohen has already suggested CSC’s 17c-a-share bid is too low and he is yet to be convinced that the all-cash bid is the best deal that can be managed.

He has even suggested that he could make a counter offer.

CSC and iSoft have had run-ins before, most notably when iSoft (then known as IBA) outbid CSC to win a British company.

“So here you have a situation that’s gone full circle,” Cohen told The Australian.

“We’ll see how this unfolds.”