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.