HP in Talks to Buy PricewaterhouseCoopers' Consultancy

After reports began to leak to the media, HP announced that it was in discussions with PricewaterhouseCoopers to acquire PwC's consulting practice. The companies are contemplating a cash-and-stock acquisition valued at $17 to $18 billion.

HP said in a statement that it has been strengthening its professional services capabilities consistent with its overall strategy of inventing customer solutions at the intersection of e-services, information appliances and an always-on Internet infrastructure. The acquisition, the company said, would complement its offerings by "further strengthening the linkage between business process transformation and technology implementation." HP also noted that "significant issues remain to be resolved" before the deal can be completed.

If completed, the acquisition would add to HP's current estimated 15 percent revenue growth and somewhat weaken its cash earnings per share this year. HP estimates that it would not affect earnings per share in 2002, the first full fiscal year of operations.

PricewaterhouseCoopers is HP's auditor, and HP said this arrangement would probably be terminated if the acquisition goes through.

It's not surprising that HP is looking to acquire a consulting firm, since professional services have not been an area of strength for the company.