CSC eyes acquisition of troubled NHS software supplier iSoft

Troubled NHS software supplier iSoft has revealed that IT services firm CSC has made moves to acquire it and has also investigated purchasing its debt.


Troubled NHS software supplier iSoft has revealed that IT services firm CSC has made moves to acquire it and has also investigated purchasing its debt.

The revelations come in a statement confirming that iSoft will take legal action after CSC – the lead contractor for the NHS’s £12.4bn National Programme for IT (NPfIT) in three out of five regions – blocked its £140m sale to Australian software firm IBA.

The software firm first threatened court action last week when CSC withheld its consent for the sale. CSC said the move would not support successful delivery of NPfIT, for which iSoft – as CSC’s subcontractor – is to supply its Lorenzo care records system.

Instead, CSC is increasing the number of its own staff working within iSoft on the Lorenzo system. Under a deal agreed between the two firms last year, CSC also has the right to step in to manage the delivery of Lorenzo to ensure delivery.

Relations between the two firms, which are responsible for delivering crucial elements of NPfIT, have now deteriorated further. In a new statement, iSoft said CSC had indicated in writing on 20 April that it would agree to the sale “subject to certain conditions”, centring on iSoft’s ability to deliver on its NPfIT commitments to CSC.

The software firm argues that a deal with IBA would leave it “better placed to perform the obligations as CSC’s subcontractor under NPfIT due to the increased financial stability and additional development resources that the merged organisation would enjoy”.

But it also alleges that CSC’s “wider interests” might be influencing its conduct. “CSC has been considering a possible offer for iSoft since November 2006, when it was formally given access to a data room containing information on iSoft for this purpose,” the software firm said.

“More recently, iSoft understands that CSC has also been considering a possible offer structure for iSoft that could involve the Californian based private equity fund Gores.”

No firm offer from either CSC or Gores had so far been forthcoming.

The software firm said CSC had also approached its banks to explore the possibility of purchasing iSoft’s debts. “This approach was made without the knowledge of iSoft and CSC has not, in iSoft’s view, provided a satisfactory explanation for this approach,” the company said.

The iSoft board had now decided it has “no alternative” but to initiate legal proceedings to ensure that CSC did not unlawfully withhold consent to the sale of the company to IBA.

CSC declined to comment on the iSoft statement, citing commercial confidentiality.

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