Beleaguered NHS software supplier iSoft is to be acquired by rival firm IBA Health, creating the fourth largest healthcare software group in the world.

IBA Health primarily operates in Australia, South East Asia and the Middle East, and will take on iSoft’s debts which amount to more than £100m. The total value of the deal, including debts, is $369m (£187m).

iSoft is contracted to systems integrator CSC to provide hospital administration software in three of the five regions of England’s £6.2bn National Programme for NHS IT.

It reported losses of more than £343m and is being investigated by the Financial Services Authority, following accounting changes.

Software development delays were also implicated in the decision by supplier Accenture to walk away from two National Programme contracts worth £2.6bn.

The firm has been in takeover talks since last October, but a number of problems have delayed the sale, including a clause that says CSC can take over development of Lorenzo, the next generation patient administration system, if it does not believe iSoft is performing adequately.

Ovum analyst John O’Brien says the deal creates some positive opportunities for the NHS.

‘The NHS will want to ensure the merger does not affect the close relationship CSC and iSoft now have in Lorenzo,’ he said.

‘But IBA is unlikely to take a more strategic role in the project and has announced that the chief operating officer of iSoft will assume responsibility for the development of Lorenzo.’