The US-owned investment fund, which already owned 30% of ISG before its bid, made a cash offer of 171p per share at the end of January.
Previously, its opening offer of 143p was rejected by the board, who have repeatedly urged shareholders not to sell their stake.
However, in light of Cathexis growing its shareholding to 48.4% over the past three weeks, the directors of ISG have decided to acknowledge defeat.
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In a statement this morning, 17 February, ISG said: "Your Board noted specifically that should the Offer fail to become unconditional and lapse, Cathexis would remain a significant minority Shareholder and this level of shareholding may be used to influence the Group's strategy, the composition of the Board or the payment of dividends, to the potential detriment of Shareholders as a whole.
"As such, Cathexis could take actions that may be to the potential detriment of Shareholders.
"The Board considers that it is in the best interests of the Company that the Company's ownership should be clear to all stakeholders including employees, clients, subcontractors and funders."
(LM/MH)
