Imaging software maker iCad Inc. said Thursday it would buy radiation therapy company Xoft Inc. for a mixed cash and stock deal estimated to be worth $13.1 million, as iCad expands into the radiation oncology market.

In the deal, iCad will trade 8.4 million shares of its own stock and $1 million in cash for all of Xoft's outstanding stock. This will leave Xoft owning about 15 percent of iCad's total shares.

iCad will also offer more money if certain revenue targets are hit within the next three years. The transaction is expected to close by the end of the year.

Sunnyvale, Calif.-based Xoft manufactures an electronic brachytherapy system designed to spare healthy tissue from radiation. The system uses an X-ray source instead of a decaying radioisotope in the seeds, so needs less shielding for treatment rooms, the company says. Around 58 of its Axxent Systems are installed worldwide. Its 2010 sales are estimated at around $5.5 million, according to the company.

Nashua, N.H.-based iCad makes computer-aided detection software for mammography, MRI imaging and virtual colonoscopies.

Its stock fell 2 percent to reach $1.43 in morning trading Friday.

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