CSC poised to buy iSoft for £200m
- 30 March 2011
CSC is reported to be on the brink of buying troubled clinical software firm iSoft.
According to a detailed but unconfirmed overnight report in The Australian newspaper CSC is close to finalising a deal with iSoft for approximately £200m (Au $300m).
CSC declined to comment on the newspaper report, telling EHI "we don’t comment on on rumour and speculation".
The report states that Virginia-based CSC, which is iSoft’s biggest customer, could finalise a takeover deal for the Australian-based company as early as today.
The acquisition of iSoft would give CSC full control of iSoft’s next generation Lorenzo software together with the largest installed base of legacy hospital, lab and GP systems in the NHS.
ISoft is CSC’s main sub-contractor in the £12.7 billion upgrade of NHS IT systems, National Programme for IT, in which the US firm holds £3 billion of contracts to install systems in the North, Midlands and East of England. Chief among these systems is iSoft’s new Lorenzo software, now running five years late.
Delays and problems in developing and then delivering iSoft’s next generation Lorenzo clinical software have hit both iSoft and CSC hard financially. They contributed to iSoft having to sell to much smaller Australian firm IBA health in 2007.
Following the purchase by IBA, which took the iSoft name, the company looked to have turned a corner, with initial installations of Lorenzo beginning. However, in a further profit warning in June 2010 led to a further collapse in the company’s share price and triggered a board room coup that saw executive chairman, Gary Cohen, depart.
In the case of CSC, delays have meant NHS revenues have not materialised and the company has been left renegotiating a new contract with the Department of Health for over 18 months, with no immediate resolution in prospect.
According The Australian a deal with CSC would allow lenders including Barclays, Bank of Ireland, Santander and Clydesdale to recoup their loans and pay back major shareholder Oceania Capital Partners (formerly Allco Equity Partners) which holds about $40m in convertible notes.
But Oceania — which bought into the company in late 2007 at 80c a share — and iSoft’s other shareholders including Maple-Brown Abbott and Orbis are unlikely to receive much more than five cents a share, the price the stock last traded at.
Trading in iSoft shares was suspended at the request of the company last Thursday, after a run on the shares . An announcement on strategic direction is promised imminently.
