IBM, PwC Consulting Agree to Terms of Acquisition

There was a time when PricewaterhouseCoopers (PwC) entertained the idea of receiving $18 billion from Hewlett-Packard for the acquisition of its consulting division. Just before the deal became final, HP pulled out. That was nearly two years ago, and a lot has changed in the world economy since then. Yesterday, IBM and PwC announced plans for the acquisition of PwC Consulting for a price tag of $3.5 billion - a far cry from the amount under consideration in the past.

"Amazing how things change, isn't it?," said Tom Rodenhauser, president of Consulting Information Services in Keene, New Hampshire. "It's a steal for IBM.... It was overinflated in October 2000. PwC was trying to get this price at the time, but didn't."

Analysts had expected the acquisition to cost in the neighborhood of $5-7 billion instead of the final agreement of $3.5 billion. PwC CEO Samuel DiPiazza said he was happy with the price.

Just two weeks ago, PwC was still courting offers from HP. "We declined the same opportunity just a couple of weeks ago," said Juergen Rottler, a vice president of marketing, strategy, and alliances for HP.

The acquisition has been approved by the boards of directors of both companies, but finalization is pending while the firms wait for regulatory approval from the Securities and Exchange Commission as well as acceptance by the PwC partnership. It is expected that the deal will close in the third quarter of this year. IBM expects to see an immediate improvement in revenues as a result of the acquisition.

IBM will merge the consultancy into its Business Innovation Services unit of IBM Global Services. The name Monday, which was chosen by PwC as the new brand for the consultancy when the firm was contemplating taking the company public, will not be used by IBM.

You may like these other stories...

Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

Upcoming CPE Webinars

Apr 17
In this exciting presentation Excel expert David H. Ringstrom, CPA shares tricks that you can use with pivot tables every day. Remember, either you work Excel, or it works you!
Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.