By Ron Coates, 1 November 2000 16:00
NEWS In a speech given in New York last night, Fiorina said: "Given the current market environment, we are re-examining every aspect of the transaction, including price." The deal, one of a string in which the Big Five accountancy firms tried to hive off their IT-based consultancy arms, was originally valued at $17bn to $18bn in cash and shares. Since then, HP's shares have dropped 23 per cent in value to around $46, lowering the value of the deal to PwC's 10,000 partner-owners. "She's playing hardball," said industry analyst Robert Bruce. "She has to look tough for her shareholders and keep the partners of PwC happy at the same time. It looks as though she'll be able to increase the cash offer, but lower the shares." Negotiators hope an agreement will be reached this month and Jon Bunn, spokesman for PwC in London, said: "As far as we're concerned, discussions are still continuing." The deal is likely to be struck at $15bn and then submitted to a vote by the 10,000 PwC partners in over 60 countries. It will bring around $1m to each partner. Hewlett-Packard hopes to gain a tax saving of $4bn. Bruce said: "Consultancy firms normally sell for annual earnings. But now the price is up to three or more times that. It has proven difficult for the partners to resist - especially with US financial regulators claiming that auditing a firm and providing it with consultancy amounts to a conflict of interest." In the past two years, Andersen has had an acrimonious divorce with its consulting arm - now to be called Accenture - Ernst & Young has sold to Cap Gemini and KPMG has sold most of its consultancy to Cisco Systems. Only Deloittes has not taken the golden guinea, instead stating its intention to remain a unified operation.
In order to post a comment you need to be registered and logged in.
Log in or create your silicon.com account below