ISoft, the ailing National Health Service IT contractor, is expected to lose its name and UK headquarters as its new Australian owners seek to restore it to health.

The group at the heart of the NHS software upgrade will move to join its suitor, IBA Health, in Sydney after it struck a £233 million deal to create the biggest healthcare IT company outside the United States.

The enlarged company plans to seek a secondary listing in London after the all-share deal that values iSoft at about £140 million and almost doubles the size of the Australian company. ISoft is expecting to take its suitor’s name.

ISoft has about £93 million in debt. ABN Amro will provide new facilities of £130 million to IBA, while the Sydney company is also raising £84 million through a placing and rights issue.

Gary Cohen, executive chairman of IBA, backed the present management team to reinvigorate a company plunged into crisis after delays to the NHS contract to centralise medical records, a series of profits warnings and the discovery of accounting irregularities. He said: “I think what’s happened over the last eight months is that there have been some significant changes in the way iSoft operates to ensure that it operationally delivers and it is achieving its milestones.”

Mr Cohen acknowledged that there would be some job cuts as core head office functions were moved to Sydney in an effort to pare costs by £11 million a year by 2009. But he said that the companies lacked a significant operational overlap.

The deal still requires the backing of Computer Sciences Corporation, the US company responsible for subcontracting NHS work to iSoft, before shareholders vote on the scheme of arrangement in July.

John Weston, the former chief executive of BAE Systems who is iSoft’s chairman, will join the board as deputy chairman. He said the deal put the NHS programme on a “sound footing”.

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