NHS provider faces bankruptcy after CSC objects to acquisition

ISoft, a key technology provider to the NHS National Programme for IT, faces bankruptcy after its NHS contract partner objected to its takeover.

iSOFT, a key technology provider to the NHS National Programme for IT, faces bankruptcy after its NHS contract partner objected to its takeover.

iSOFT partner CSC says it is opposing the takeover deal with Australia’s IBA, after evaluating the effect of the acquisition on its existing NHS contracts.

CSC uses iSOFT’s Lorenzo records system for the NHS contracts it holds for the North Midlands and East (NMEPfIT) regional cluster.

The IBA takeover was dependant on CSC approval. The acquisition would have led to loss-making iSoft being refinanced from money raised by IBA. The collapse of the deal now leaves iSOFT facing bankruptcy, as its existing credit facilities run out in November.

Neither iSOFT nor IBA have commented on CSC’s decision. CSC said, “it is committed to the successful delivery of the NHS National Programme for IT”, and that its decision to oppose the takeover is “governed solely by what it considers is in the best interests of achieving this goal”.

Phil Codling, a principal analyst at Ovum, said, “CSC is not saying exactly why it is unhappy with the bid from IBA. Its primary concern will be the prospects for effective delivery of iSOFT's Lorenzo software, the development of which is literally years behind schedule already.

“Perhaps CSC is concerned that the amount of debt IBA would need to take on to finance the purchase would impact development budgets,” he said.

If iSOFT does go to the wall, CSC may feel it would be in a better position to develop the software itself, said Codling.

The door may now be open to other parties - including McKesson and General Atlantic - that were previously interested in acquiring iSOFT.

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