Technology group Misys has proposed a merger of its healthcare arm with Allscripts, a medical software specialist. The $330 million will see Misys acquire the rival and spin off the enlarged unit as a separate business.

Misys plans to raise £75 million through an institutional placing to part-finance the transaction. It believes the merger will create annual pre-tax cost savings of up to $25-30 million within the next three years.

Misys will acquire of controlling stake of the new business, to be called Allscripts-Misys, of 54.5%. It will be listed in New York.

Mike Lawrie will become executive chairman of Allscripts-Misys and retain his role as chief executive of Misys, while Allscripts CEO Glen Tullman will become CEO of the combined group.

Shares in Misys jumped more than 20% in trading on Tuesday morning. The merger should be completed by the third quarter of 2008, the company said.

Misys is enjoying strong trading in its existing operations, having updated the market on Tuesday with its third quarter performance.

Group revenue increased by 12% to £114 million, with operating profit up 166% to £15 million.

Chief executive Mike Lawrie said: 'This month marks the one year anniversary of announcing the Misys Turnaround Strategy. Our results today are another data point demonstrating that we are executing successfully against our strategy and laying firm foundations for future growth. This positive set of results is a credit to our team who have embraced the need to deliver results for our customers and shareholders.'