Big Blue Monday Dawns For IBM
IBM Corporation has agreed to buy Pricewaterhouse Coopers’ global business consulting and technology services unit, PwC Consulting for $3.5 billion. The boards of both firms have approved the transaction, but it remains subject to regulatory approval and local partnership votes. The transaction is expected to close by the end of the third quarter. Of the $3.5 billion purchase price, $2.7 billion is expected to consist of cash, $400 million from a convertible note and $400 million in IBM stock. It is expected that IBM will swallow a further $500 million in charges related to the overall cost reduction and integration of PwC Consulting into IBM’s global services organization. PwC Consulting’s revenues for the fiscal year ended June 2002 were $4.9 billion, down from $5.9 billion in 2001. PwC had planned to hive off its consulting business, to be rebranded ‘Monday’, via an initial public offering.