PracticeConsultingHP in talks for PwC consulting business

HP in talks for PwC consulting business

Computer manufacturer Hewlett-Packard has confirmed it is in talks to buy the consulting division of PricewaterhouseCoopers in a deal believed to be worth around £12bn.

In negotiations taking place on Saturday evening, HP and PwC are understood to have made significant progress on a number of issues, although no written agreement has been signed.

The talks follow PwC’s decision in February this year to spin off its consultancy arm. Big Five accountancy firms have been under pressure from the US Securities & Exchange Commission to separate their consultancy and audit services to avoid so-called conflicts of interest. PwC is in an awkward position with the SEC as some of its client work for Microstrategy is currently being examined for conflicts of interest by the US regulator.

PwC originally set a July 2000 deadline for the separation but was then forced to admit that this target had been unrealistic. In June, the firm’s managing partner Kieran Poynter told Accountancy Age the split would most likely occur towards the end of the year. He also said the management consultancy and the growing business process outsourcing division, would become independent.

HP was chosen from a list of companies including electrical and engineering giant Siemens and General Electric. And PwC’s reluctance to move to exclusive talks with any party could spark a bidding war between interested parties.

Californian-based HP said in a statement that the purchase would be part of its strategy of providing clients with solutions to high-technology problems.

‘The acquisition of the PwC consulting practice would complement HP’s offerings by further strengthening the linkage between business process transformation and technology implementation,’ the statement said.

It is widely recognised that computer companies need to broaden and bolster their service offerings but issues might arise over the way in which PwC’s consulting business could integrate with HP’s technology.

HP chief executive Carly Fiorina is seeking to grow HP’s consulting services business and is already offering them to potential buyers of the company’s computer systems. Fiorina became HP’s first chief executive in mid-1999 and if completed the deal would be the company’s first major acquisition since she took the helm.

Any deal would require the approval of PwC’s partners and would be likely to need the consent of the SEC.

Links

£14bn bid for PwC consulting business

Hewlett-Packard confirms PwC talks

July deadline for split unrealistic, says PwC

PwC hints at July 1 deadline for split

PricewaterhouseCoopers turns on rival firms

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