OK so it is both things.
ETO means economic, organisational or technological reason - you probably knew that - and and ETO reason when applied to TUPE is a valid defence for applying redundancies.
I am sorry to hear about your plight but I don't know of any legal protection. I think F30 has expressed well the way these things work. If you are unable to attend for interview, I think the process will go ahead. I am sure that you will be considered, but I agree that it won't help your case.
I think the best thing is to phone in the morning, explain that you are signed off work, explain how keen you are to be involved in the future organisation and to ask for some time. That may (unfortunately) result in them asking how much time you want - which may put you on the spot.
As I am sure you know, 'absence' - which includes sickness as well as many other potential reasons for non-attendence at work - is often used as one of the criteria for selection for redundancy. This is (legally) fair.
However 'absence' should be taken as a series of events - not a one-off and if you have a strong attendence record going back then that will help you.
Regarding your comment about being stitched up, I can understand how you must feel, but I do urge you to turn to positive thoughts if you are serious about being of the future organisation. These things rub off in interview you know.
The other way to think about it, is to consider that you may be better off out of it - since the implication from the winning bidder is that it believes it can run the same contract with a smaller team of resources. That either means the organisation has to work harder or smarter. Some TUPE transfer contracts (and the staff that transfer with it) find that the brunt of the 'efficiencies' come from the way they are expected to operate. I guess it depends what terms you are being offered - and your skills to offer in a currently difficult employment