CSC guns for iSoft R&D
- 04 April, 2011 11:29
CSC Australia’s director of health services this week pinpointed the research and development portfolio of ailing e-health provider iSoft (ASX:ISF) as a key attraction of the company’s $US188 million ($AUD180 million) takeover bid.
The California-based parent company of CSC Australia confirmed buy-out talks with iSoft over the weekend, offering 17c Australian per share and ending a week-long freeze on iSoft shares pending completion of takeover talks. The bid values the company beyond the 5.2c per share at which it traded prior to suspending trade on the ASX.
iSoft shareholders will vote on the deal in May following unanimous approval from the company board, with CSC expecting to complete integration of the company and its 3300 employees by the end of its second quarter in September. iSoft will be delisted from the ASX as part of the deal, though CSC is yet to confirm whether it will retain the brand or assimilate contracts and products under the wider CSC umbrella.
CSC has committed to continuing internal transition programs outlined by iSoft over the past few years to eliminate cash burn, but is yet to confirm whether any further reductions in headcount will be made among iSoft staff. The provider had already flagged plans to lay off 800 staff or 17 per cent of its original workforce of 4500.
The company is yet to speak to iSoft clients about the deal.
According to CSC, the offer is part of a wider play on the e-health market, including a move on the 13,000 healthcare providers in 40 countries currently using iSoft products.
“The combination of these companies will further establish CSC as an innovative leader in global healthcare IT,” CSC chairman and chief executive, Michael W. Laphen, said in a statement at the weekend.
In a teleconference to media following the proposal announcement, CSC Australia’s director of health services, Lisa Pettigrew, said the buy-out proposal looked primarily to the company’s research and development program. This included the research and development staff in particular, as well as the 200 consulting clinicians iSoft currently claims.
Pettigrew said the iSoft buy would also provide CSC access to New Zealand as a new e-health arena, as well as a number of acquisitions made by the provider recently including UltraGenda, Patient Safety International and BridgeForward.
“We know this company really well and we’ve run the ruler over it a number of times; you don’t enter a transaction of this size and complexity without looking at all of its elements,” she said.
The buy-out proposal follows a run of increasingly bad news from the company. In February, it reported an $84.1 million net loss in the first half of the 2011 financial year due to restructuring costs and impairment charges. The company, which had made a $4.8 million profit in 1H10, spent the most recent half attempting to restore the financial health of the business.
In December it began selling off parts of its business to pay down its debts. The first to go was its financial management solutions unit, iSoft Business Solutions (iBS), to Capita Group PLC.
Earlier in the month it appointed acting chief executive, Andrea Fiumicelli, as its new permanent CEO. Fiumicelli was named acting CEO in September, following the resignation of Gary Cohen from the position.
However, Cohen is known to retain a substantial holding in the company, with speculation he could try to block the buy-out.
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