IBA Health, the Australian-based software group, has asked for its shares to be suspended for an extra day to continue talks with iSoft, the troubled NHS IT supplier, over a possible £230 million takeover of the British group.

An announcement on the deal, which would create the largest healthcare IT company outside America, is now expected before the start of trading on the Australian Securities Exchange tomorrow — at about midnight London time tonight.

IBA, which first expressed an intrest in iSoft in February, last week unveiled plans to offer iSoft shareholders 1.1 new IBA shares for each iSoft share, equivalent to 56.9p a share, valuing the company at around £140 million.

ISoft, which said in October that it was exploring the possible partial or full sale, also has around £93 million in debt.

BACKGROUND

• ISoft merger back on course

• CSC prepared to offer cash for iSoft

• CSC 'to counterbid for iSoft' says NHS supplier

• Problems at Isoft are far from over

• Sparks fly between ISoft and CSC

ISoft comment: The hardline

ISoft is considering legal action against CSC over its attempt to block a sale to IBA. Read the comment here.

Related Internet Links

• ISoft company information

• ISoft share price chart

• ISoft forecasts

Related Links

• IBA Health in iSoft bid talks

• IBA Healthcare poised to launch iSoft bid

IBA has said it expects to keep senior iSoft management in place if it succeeds in taking over the ailing British company, given the group's role in the Government's multibillion pound NHS IT upgrade.

IBA's shares wre suspended last week after it said it was looking to raise A$200 million (£82 million) of new capital through a placing and rights issue, with ABN Amro Rothschild underwriting the deal.

A further £130 million debt facility is also being sought for the combined iSoft and IBA company, underwritten by ABN Amro.

The debt would be used to refinance iSoft's existing debt and to underpin the development of its core Lorenzo product and the NHS IT modernisation programme.

IBA, which announced its interest in iSoft in February, said that it expected cost synergies from the combination of the two companies to exceed A$27 million in the year to June 30, 2009.

ISoft, which is being investigated over potentially misleading statements to the City, plays a crucial role in the upgrade of the NHS's IT systems. The alleged accounting irregularities, profit warnings and delays on contracts plunged it into crisis last year.

The company called in Morgan Stanley and Gleacher Shacklock late last year to help to organise a restructure. It is hoping that a sale will help to resolve long term funding issues. The company has a £141 million debt facility that which must be renegotiated by November 14.

IBA faces potential opposition in its bid for iSoft from McKesson, an American drugs distribution company, General Atlantic, the private equity firm, and Cerner, an American group. Any bidder must gain the approval of Computer Sciences Corp, the American company that holds the contract for iSoft's key NHS work.

ISoft revealed this month that it expected revenues for the year to the end of April to be at the upper end of a predicted £171 million to £181 million range. Analysts said that the update, before annual results in July, suggested that iSoft would make a small profit for the year.

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