Computer Sciences Corporation (CSC) has fired the opening shot in a potential takeover battle for iSoft after announcing that it was considering paying cash for the troubled British software company after an all-share offer from IBA Health.

ISoft and CSC issued statements this morning confirming that the two were in talks, aimed at resolving an impasse over CSC's recent decision to block IBA’s potentially life-saving acquisition of iSoft.

Shares in iSoft rose marginally today from 47.5p to 48p.

CSC is iSoft's largest customer in providing software to the NHS's National Programme for IT.

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

Last month IBA agreed a £233 million deal to acquire iSoft, the debt-laden company that has been hit by a number of problems in recent months, including the discovery of accounting irregularities.

However, CSC stepped in to block the deal, citing a change-of-control clause in its contract with iSoft.

The company started legal proceedings against CSC on June 4, but announced today that it had "temporarily" suspended legal action as talks between the two companies progress.

It is understood that CSC has engaged in talks with Gores, the US venture capital firm that is also believed to be in talks with Torex Retail, another troubled software business, about a potential takeover.

CSC said today that it “does not exclude the possibility of making an offer for iSoft", though at the same time the American company said there was no certainty that it would make a bid for the company.

The company added: "Should such an offer be made, any consideration is likely to be solely in the form of cash and will not include any CSC publicly listed securities."

iSoft said that it was now engaged in discussions with CSC "in relation to the commercial arrangements under which CSC would take a greater role in the management of iSoft's work on the National Programme for IT".

The company added: "ISoft also continues to seek CSC's consent to the change in control of iSoft that would result from the IBA Health Limited offer for iSoft."

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