PracticeConsultingKPMG Consulting eyes European arms

KPMG Consulting eyes European arms

NASDAQ-listed KPMG Consulting is planning to buy the UK and German consulting arms of KPMG for £1bn, according to weekend reports.

News of the purchase was made known to European partners at a meeting earlier in the month with KPMG Consulting chairman Rand Blazer, according to the Sunday Times newspaper.

The offer is to be made to over 1,000 partners later in the year. Germany and the UK are the two remaining European consulting divisions not already part of the US-listed company.

As part of the deal, partners are expected to be offered shares in return for relinquishing ownership of the practice and the right to future earnings from revenues generated from the accounting firm.

But the reports of the plan to purchase the European consulting arms were dismissed by the firm as ‘speculation’ and a spokesperson refused to be drawn on the issue.

KPMG floated its consulting wing in February this year. It offered 112,482,000 shares of its common stock at $18 a share, valuing it at over $2bn (Pounds 1.4bn). But the stock has suffered a loss value since listing, and was last quoted at $14.55.

In April the consultancy cut 5% of its work force in the US and Canada, blameing weakened demand in some of its service sectors. This was followed by a 21% drop the firms’s quarterly income reported this month, which also blamed on the economic slowdown.

KPMG Consulting earned £24m compared with an operating profit of £30.1m or 25p a share in the third quarter.

Revenue for the twelve months ending 30 June was healthy though. KCI earned £2.1bn compared to £1.7bn in the previous fiscal year – an increase of 21%. Revenue for the fourth quarter was £516m, an increase of nearly 8% over the fourth quarter of the prior year.

Links

KPMG Consulting income falls 21%

Consultancy – US downturn begins to bite

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