IBM To Buy PwC For $3.5 Billion

IBM has agreed to acquire PricewaterhouseCoopers unit PwC Consulting for $3.5 billion in cash and shares.

The deal is subject to the approval of regulators and of local PwC firms through their partners.

The companies hope to complete the transaction by the end of the third quarter.

PwC says it will no longer pursue a planned initial public offering.

IBM is hoping to create a consulting powerhouse, combining IT expertise with PwC's business knowledge.

Samuel DiPiazza, chief executive of PwC, says the deal concludes the firm's plan to fully separate the consulting arm from the accounting group.

There has been much criticism of the conflict of interest caused to auditors when their companies have a separate consulting relationship with a client.

Mr DiPiazza says: "It will unleash the consulting unit from the regulatory restraints of our industry, and will allow the business to reach its full potential."

PwC Consulting, which is expected to have 2002 consulting revenues of about $4.9 billion, will be combined with the business innovation services unit of IBM global services.

Ginni Rometty, the current head of that unit, will become general manager of the expanded unit reporting to IBM global services group executive Doug Elix. ©

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