ISoft, the healthcare IT group, has given its firmest indication yet that it will win the go-ahead for a proposed merger plan.

The company, a sub-contractor on the NHS's £6.2 billion IT modernisation programme, said that there is now "a reasonable likelihood" that CSC, its key customer, will withdraw its refusal to back the takeover by Australia's IBA Health.

The statement came as Richard Granger, head of the NHS's IT modernisation unit, told E-Health Insider that the deal would be agreed within "the next few working days".

CSC is one of the largest contractors on the NHS programme and uses iSoft as a sub-contractor to deliver software that will enable hospitals and GP surgeries to store and access patient records digitally.

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

ISoft's statement, made in a scheme of arrangement document sent to iSoft shareholders to outline the details of the merger plan, comes after CSC last month said that it would not back the merger. ISoft subsequently revealed that CSC had tried to buy its substantial debts, potentially indicating its interest in buying the company. CSC was forced to clarify that it had not ruled out making an offer of its own.

The two companies entered talks to resolve the issue earlier this month, after iSoft started legal proceedings over concerns that CSC had "unreasonably withheld and/or delayed its consent". CSC has a right to veto any change of control at iSoft as part of its NHS contracts.

The US IT group has indicated that it wants to base its decision on the extent to which the merger will improve iSoft's ability to deliver on its NHS contracts.

The NHS's Connecting for Health agency, which runs the National Programme for IT modernisation programme, also has the right to reject a change of control at iSoft, but has not done so.

ISoft today reiterated its belief in pursuing the merger with IBA, over other options. "This route offers better value and greater certainty for iSoft Shareholders than any other available alternative," it said.

ISoft needs to shore up its balance sheet, after accounting irregularities uncovered last year forced the group to rewrite previous years' accounts and renegotiate banking facilities. A merger deal will provide financial stability and boost the company's ability to win new business.

IBA has said that it will walk away if CSC opposition cannot be overcome.

A court meeting and extraordinary general meeting of shareholders to approve the deal will be held on July 6. It is proposed that the shares will stop trading in London on July 26. IBA Health will take a secondary listing on the London Stock Exchange on completion of the deal.

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