CSC blocks iSoft sale 'in best interests' of NHS IT

CSC has explained its decision to block the sale of iSoft

Computer Sciences Corporation (CSC), which earlier this week blocked the proposed takeover of iSoft, says it wants to work with the software supplier to ensure long-term financial stability rather than allow it to be sold.

IBA Healthcare last week announced plans to buy the troubled supplier, which is contracted by CSC to deliver its Lorenzo hospital administration software as part of the National Programme for NHS IT (NPfIT).

But CSC has a step-in clause that allows it to take over development of Lorenzo if iSoft is not performing adequately.

CSC says its decision to oppose the merger is governed ‘solely by what it considers to be the best interests of achieving its goal’ in delivering the NHS programme.

The supplier also says it has undertaken due diligence to assess the impact of the IBA transaction on the NPfIT.

But iSoft says it was confused by the decision, claiming CSC had previously indicated it would support the deal. Without the cash injection provided by IBA, iSoft could be forced into administration when debt repayments begin in November.

If iSoft collapses, CSC could step in and take over the development of the NPfIT applications, without formally acquiring the software firm.

CSC could be concerned by the amount of debt IBA would need to take on to finance the purchase and how it would affect development budgets, says Ovum analyst Phil Codling.

CSC is paid when it hits milestones on delivery to NPfIT and software delays can mean it does not get paid or even faces penalties.