Hewlett Packards Acquisition of PricewaterhouseCoopers Consulting Firm

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Hewlett Packards Acquisition of
PricewaterhouseCoopers Consulting Firm

• Presented by
• Team 1
• HP Strategic Acquisition Committee
• Julie Dickman
• Valerie Kimball
• Michael Morrison
• Gregory Sostaric

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Hewlett Packard Objective

• Provide global consulting services to clients
• Create a total customer experience
• Maintain market competitiveness and increase
  profit growth

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Key Factors

• Competitors
• Carlys goal
• Alternatives
• SEC filings

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Proposal

• The purchase of PricewaterhouseCoopers consulting
  firm for 18 billion in cash and stocks.

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PwC Background

• Worlds largest professional service firm
• 31,500 consultants in 152 countries
• Revenues of 7.48 billion in 1999
• - Sustained annual growth rates of more
  than 20

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Criteria for Acquisition

• Cultural Fit
• Shared Strategic Vision
• Complementary customer mix
• Leadership in e-space
• Global Footprint

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Cultural Fit
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Shared Strategic Vision
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Complementary Customer Mix
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Leadership in e-space
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Global Footprint
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Benefits of the Acquisition

• Strengthen the linkage between business process
  transformation and technology implementation
• Increase total customer experience
• Catapult HP consulting into the Big Five
  consulting firms

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Risks of the Acquisition

• Consultants could be characterized as salesman
  for HP products
• 2/3 of PwC consultants could leave
• Risk of losing 18 billion

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Financial Feasibility

• HP has an average of 3.4 billion in Cash Flows
  from Operating Activities
• HP Net Revenue for 1999 was 42 billion up from
  39 billion in 1998
• PwC consulting had revenues of 7.4 billion in
  1999

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Legal Considerations

• Sherman Act
• - Sections 1 and 2
• Clayton Act
• - Sections 3 and 7

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Recommendation

• Integrate HP and PwC consulting firms, keeping
  them a separate division of HP
• Consulting firm will have a direct link with
  hardware department while remaining independent
• Consulting firm will have a separate
  administration that has the power to make
  decisions outside HP corporate jurisdiction

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• Keeping up with the rapid changes in technology
  requires bold moves. Pulling such a deal
  together will be tough-though no tougher than
  falling behind rivals without it.
• -David Rocks, 2000

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Questions