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It is understood that IBM plans to pay for the acquisition with USD2.7 billion in cash, USD400 million in stock, and USD400 million in a convertible debenture. The deal has been agreed between IBM and the leadership board of PricewaterhouseCoopers (PwC) and will have to be approved by PwC's 9,000 partners worldwide, as well as by the US Securities and Exchange Commission.
"This transaction fulfills our commitment to fully separate PwC Consulting from PwC," said Samuel A. DiPiazza, Jr., chief executive officer of PwC said in a statement. "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 will be combined with the Business Innovation Services unit of IBM Global Services, creating a new global unit. IBM Global Services employs approximately 150,000 providing services, consulting, hardware, software and research to client companies.
PricewaterhouseCoopers is one of the largest accounting firms in the world, employing more than 150,000 people worldwide. PwC Consulting is estimated to earn USD4.9 billion in consulting revenues in 2002 and employs 30,000 people worldwide.
Industry sources also indicated that there were unlikely to be layoffs as a result of the acquisition, since there is no major overlap between PwC Consulting and IBM Global Services. Any layoffs that do occur are more likely to be as a result of the major downturn in the IT consulting industry. There are an estimated 250 employees of PwC Ireland that could be impacted by the acquisition, though company representatives in Ireland were unwilling to discuss the deal when contacted by ElectricNews.Net.
Pressure has been mounting on the large accounting firms to split off their consulting businesses over the past few months because of a perceived conflict of interest between them in their role as auditors and their consulting business.
The split between the audit and consulting role will mainly affect PwC's relationship with the top 3,000 or 4,000 companies worldwide. The consequences of the split will be less clear-cut for SMEs in Ireland, where SEC rules do not apply. Some of those involved in consulting here in Ireland may actually remain with PwC.
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