An Post has directed its lawyers to discuss a possible acquisition of Escher Group, a small Boston-based software company, in a deal potentially valued at between £50 million and £75 million, The Irish Times has learned.

The two companies have been partners in marketing a post office software system both in Ireland and abroad, but are currently disputing the ownership of the programme.

A spokesman for An Post denied categorically that the State-owned company had offered to buy Escher. But documents seen by The Irish Times and signed by a senior An Post executive show that preliminary moves have been made.

In a separate development, An Post executives have admitted in affidavits to a US court that it cannot maintain or repair the software system which delivers Department of Social, Community and Family Affairs payments to hundreds of thousands of people each week because Escher has not provided a key code.

This appears to be in direct conflict with part of a clarification published in The Irish Times two months ago after an earlier report on the legal dispute with Escher.

Last year, Escher accused the chief executive of An Post, Mr John Hynes, of scuppering the sale of the software firm to Andersen Consulting for $70 million (£50 million). If a US judge rules that it owns the software, the way would be clear for the smaller company to pursue the case further and seek damages.

A lot rides on the outcome of the case because the two companies have together sold the software to run post office systems in Britain, Singapore, Australia, Denmark and other countries.

Any acquisition by An Post of such magnitude would have to be cleared by the Cabinet. The clarification published in The Irish Times in November set out An Post's position that the dispute with Escher would have no impact on the system which delivers around 300,000 social welfare and pensions payments each week. "The dispute could not affect, in any way, An Post's ability to operate the systems it currently uses to deliver social welfare and pension payments," the clarification read.

However, testimony sworn last week by Ms Fionnuala Higgins, the general manager of Post Consult International (PCI), the section of An Post which deals with the software, says: "Escher's failure to provide An Post/PCI with the source code for the software has prevented An Post/ PCI from completing its own system and has interfered with the maintenance, repair and enhancement of its own present operating system."

In another affidavit, sworn by the deputy managing director of PCI, Mr Liam Church, he states: "Escher's failure to provide An Post with the source code is of critical and immediate interest because without the source code An Post cannot maintain, repair or enhance its present operating system."

Another affidavit, sworn by Mr Joseph Cosgrave, general manager of the central operations division at An Post, says its ability to maintain and enhance the live software system on an ongoing basis was seriously constrained, "exposing An Post to irreparable injury".

A spokesman for An Post said the company felt constrained in what it could add to explain any apparent discrepancy between the sworn testimony and its public statements. "These matters arise from legal proceedings initiated in the US by Escher against An Post. In these circumstances, An Post is severely inhibited in what it can say other than to re-affirm in the strongest terms that the dispute will have no impact on An Post's ability to operate delivery of social welfare and pension payments as it has done since 1994."