Shares in medical software company iSoft are back under pressure following fears that talks over a #200 million sale of the business had broken down.
The problems are believed to centre on discussions between drugs distribution firm McKesson, which wants to buy iSoft, and US technology giant Computer Sciences Corporation (CSC), the firm responsible for subcontracting NHS IT work to iSoft.
CSC, which last year took over a contract from consultancy Accenture to upgrade computer systems for the NHS, has a major office in Solihull where it employs severall hundred people.
The transfer of the contract covering the North-east and Eastern England brought fresh hope for the #6.2 billion upgrade, which is one of the world's biggest IT projects but running about two years behind schedule.
According to one report yesterday, talks have broken down over certain contract conditions that McKesson wants included as part of any deal.
Shares in iSoft have been on an upward path since October, when the beleaguered firm revealed that it had been approached by financial and trade buyers that were keen to buy the company, take a stake or form an alliance.
But the stock slipped by six per cent on Wednesday over fears of the takeover threat.
The Manchester-based company, which closed its Birmingham office more than a year ago, was plunged into crisis in 2006 after delays to the NHS contract to provide a centralised database of medical records, coupled with a series of profits warnings and the discovery of accounting irregularities.
In August, the company announced losses of #343.8 million after writing down the value of a major acquisition it made in 2004.
ISoft secured short-term banking arrangements in August, but the facilities are due to expire in November and will generate progressively higher levels of interest payments until then.
One report said that McKesson was seen as the best buyer for the firm, but that it needed to drop its current demands. A source said: "Until they do that, they’ve been told that they’re not going forward."
Two other bidders, US private equity firm General Atlantic Healthcare and IBA Health of Australia, also made it on to the shortlist for iSoft.