IBM in $3.5bn bid for PwC Consulting

IBM is set to buy PriceWaterhouseCoopers' IT consultancy arm in a deal estimated to be worth $3.5bn - a move which will pique HP, which itself has long been interested in the outfit. Just two years ago, it tendered a rumoured $18bn bid for the company, but negotiations failed.

The cash and stock deal will bolster IBM's already impressive services offering, which generated $8.5bn in revenues last year, and employs around 150,000 people. PwC's staff will add another 30,000 or so to IBM Global Services' headcount, and are expected to bring in around $4.9bn worth of business this year.

The deal will end PwC's plans to float the division and will mean the Monday brand - PwC's new name for the business - will disappear within months of its birth.

PwC's consultancy partners will make about $600,000 (£382,000) each from the sale.

PwC Consulting will be combined with the Business Innovation Services unit of IBM Global Services, creating a new global unit. Ginni Rometty, currently general manager of IBM Global Services - Americas, will become general manager of the new unit, reporting to Doug Elix, senior vice president and group executive, IBM Global Services.

Elix said in a statement. "This is an exceptionally good fit - both strategically and culturally. Our businesses complement each other and we speak the same language."

Samuel A. DiPiazza, Jr., chief executive officer of PricewaterhouseCoopers, added: "This transaction fulfils our commitment to fully separate PwC Consulting from PwC. It will unleash the consulting unit from the regulatory restraints of our industry, and will allow the business to reach its full potential. Combining PwC Consulting with IBM not only fully achieves the goals we set for the separation, it provides clients and our professionals with greater opportunities and access to innovative solutions."