Merger & Acquisition - Ibm and Pricewaterhouse Consulting
before – MERGER & ACQUISITION of IBM and Pricewaterhouse Consulting
1. WHY – UNDERLYING REASONS FOR THE PROJECT
Over the past five years, IBM has quietly transformed itself into a "software, solution and services" company. With the transformation from a hardware vendor to a solution provider, it has entered the area of consulting services.
IBM bought PricewaterhouseCoopers Consulting (PwCC) in October 2002 and became the world’s largest technology services company, with annual revenue of $40 billion. By comparison, its next-largest competitor, Electronic Data Systems Corp., posted $21.5 billion in sales at the same year. The acquisition by IBM, which already has huge presence in the consulting market, affected other companies such as Sun Microsystems, Dell Computer, Hewlett-Packard and EDS.
IBM is a strong technology player; PwCC is a strong player in strategic consulting, particularly in the enterprise area. The real strength of this acquisition is the ability of IBM to offer strategic consulting to corporate management where it has been weak. PwCC has strategic consulting expertise, but was generally considered weak in technology. With this merger both the companies can complement their strengths.
With the closing of this sale, PwCC effectively completed the reorganization that began more than two years ago of 2002, and fulfills the commitment to unleash the consulting unit from the regulatory restraints of the industry. Combining PwCC with IBM fully achieves the goals set for the separation, it also provides clients and professionals with greater opportunities and access to innovative solutions.
2. HOW – M&A PROPOSED (STOCK, CASH, STRUCTURE)
In 2002, IBM completed 12 acquisitions at an aggregate cost of $3,958 million, and the largest acquisition was PwCC. IBM paid for the purchase of PwCC $3,474 million ($2,852 million in cash from reserves and current cash flow, $294 million primarily in the form of restricted shares of IBM common stock and
1. WHY – UNDERLYING REASONS FOR THE PROJECT
Over the past five years, IBM has quietly transformed itself into a "software, solution and services" company. With the transformation from a hardware vendor to a solution provider, it has entered the area of consulting services.
IBM bought PricewaterhouseCoopers Consulting (PwCC) in October 2002 and became the world’s largest technology services company, with annual revenue of $40 billion. By comparison, its next-largest competitor, Electronic Data Systems Corp., posted $21.5 billion in sales at the same year. The acquisition by IBM, which already has huge presence in the consulting market, affected other companies such as Sun Microsystems, Dell Computer, Hewlett-Packard and EDS.
IBM is a strong technology player; PwCC is a strong player in strategic consulting, particularly in the enterprise area. The real strength of this acquisition is the ability of IBM to offer strategic consulting to corporate management where it has been weak. PwCC has strategic consulting expertise, but was generally considered weak in technology. With this merger both the companies can complement their strengths.
With the closing of this sale, PwCC effectively completed the reorganization that began more than two years ago of 2002, and fulfills the commitment to unleash the consulting unit from the regulatory restraints of the industry. Combining PwCC with IBM fully achieves the goals set for the separation, it also provides clients and professionals with greater opportunities and access to innovative solutions.
2. HOW – M&A PROPOSED (STOCK, CASH, STRUCTURE)
In 2002, IBM completed 12 acquisitions at an aggregate cost of $3,958 million, and the largest acquisition was PwCC. IBM paid for the purchase of PwCC $3,474 million ($2,852 million in cash from reserves and current cash flow, $294 million primarily in the form of restricted shares of IBM common stock and