Under the terms of the deal, IBA will offer 1.1 of its own shares for every iSoft share, valuing each iSoft share at 58.1 pence. IBA will fund a repayment of iSoft’s banking facilities through the proceeds of a conditional placement and a rights issue expected to raise 84m pounds ($166.6m), and a new debt facility worth 130m pounds ($257.8m).

The offer is conditional upon the approval of IT services vendor CSC, with whom iSoft is working on the highly controversial UK National Health Service IT project. CSC has said that before giving its consent to the deal, it will need to be satisfied that the acquisition by IBA will enhance the ability of iSoft to deliver under [the NHS’s National Programme for IT].

As part of the NHS IT project, iSoft is contracted to provide software, including its flagship Lorenzo product, to the three regional clusters managed by CSC. Delivery of the applications, however, has been beset by delays and iSoft’s performance was heavily criticized last year by CSC and by Accenture, which left the NPfIT in September 2006.

iSoft has also been at the center of a storm over its revenue-recognition practices. The company was investigated by UK financial watchdog the Financial Services Authority after an internal investigation found accounting irregularities in 2004 and 2005 that required a more formal examination. iSoft suspended two members of staff and subsequently changed its accounting policy.

The turbulence at iSoft over the last 18 months has severely depressed the company’s share price. In January 2006, it was valued at about 400 pence per share, but by March 2007 the price had fallen to around 30 pence per share.

IBA first confirmed its interest in iSoft three months ago. Since 2004, IBA has followed an international growth strategy based around strategic acquisitions. The company has completed six purchases over that time, the largest of which saw it pick up Indian healthcare IT company Medicom Solutions for AUD 33.6m ($27.8m).

In its most recent fiscal year, IBA reported net profit of AUD 15.3m ($12.6m) on revenue of AUD 59.2m ($49.0m). Earlier this month, iSoft said it expected revenue for the year to April 30 to come in at the upper end of its forecast range of 171m pounds ($338.9m) to 181m pounds ($358.7m).