IBM could snap up PWC's consultancy arm

IBM is reportedly considering whether to buy or join forces with the consultingarm of PricewaterhouseCoopers (PWC).

According to reports, PWC, which is the largest accounting and consulting firm in the US, is debating whether to separate its consultancy arm from its accountancy business - the company's two highest revenue-generating units - with the aim of selling off the consulting wing.

PWC was formed on 1 July 1998, following the merger of Price Waterhouse and Coopers & Lybrand, and a taskforce was set up last year to look at the company's long-term strategy.

A PWC spokesman confirmed that the taskforce is nearing the end of its work, but declined to give details on how the company would be restructured. He said, however, that the group has not ruled out any options including spin-offs or a sale.

Any talk of a deal with IBM is "just a rumour as far as we are concerned", said the spokesman, adding that "the status quo is not an option".

The rumours follow the publication of a damaging report against PWC by the Securities and Exchange Commission (SEC), which found that nearly half of the firm's partners violated industry rules by having financial ties to PWC's clients.

While the findings damaged PWC's ability to attract and retain customers for its consultancy practice, such a problem would be likely to disappear if the accounting unit were spun off.

An alliance with IBM and its skilled personnel would also make it easier for PWC to develop ecommerce strategies for customers not in the technology business.

Rob Enderle, an analyst at researcher Giga Information Group, said PWC is IBM's accounting firm and that "aligning with PWC's consulting arm might make sense".But he added: "I'm not sure it would make sense to buy the business because it would create some SEC reporting issues."

An IBM spokesman said it is company policy not to comment on rumours or speculation.