Embattled UK software firm iSoft has agreed to be sold to a German firm which has topped a rival bid.

Frankfurt-listed CompuGroup has offered about £160m for iSoft, trumping the £132.3m the UK firm had accepted from Australian software company IBA Health. Under the deal, CompuGroup will sell on the part of iSoft's business that is working on a £12bn NHS project to Computer Sciences Corporation (CSC). U.S.-based CSC currently subcontracts the NHS work to iSoft. IBA, which made its offer in May, said that it was now ""considering the options available to it"". The prospect of a bidding war sent shares in iSoft up by 7%. CompuGroup's offer must still be backed by iSoft's shareholders. Analysts have argued that a takeover would be a lifeline for the ailing company, which has been hit over the past 12 months by delays to the development of the centralized patient records database for the NHS. The Financial Services Authority has also been investigating alleged accounting irregularities at the firm between 2003 and 2005