HP says it passed on PwC acquisition two weeks ago

PwC approached Hewlett-Packard only two weeks ago, with an offer to open the negotiations at a similar valuation to the figure...

PwC approached Hewlett-Packard only two weeks ago, with an offer to open the negotiations at a similar valuation to the figure that clinched the deal between IBM and PwC on Tuesday.

Juergen Rottler, vice-president of marketing of strategy and alliances at HP Services, said, "I don't know the exact number and talks never really got down to that level, but it was in the same ball park as what IBM is offering."

The deal was nixed at HP for both short- and long-term reasons, said Rottler. In the short term, companies are not looking for business process and strategy solutions - PwC's strong suit - but rather for technology solutions to integrate the various silos of existing technology within an enterprise.

HP believed it was better not to exclude the other four major services companies - Accenture, KPMG, Cap Gemini Ernst and Young, and Deloitte Consulting - from future partnerships or the niche players such as Capco in the financial services industry.

HP failed to acquire PwC in 2000. With PwC's valuations so much higher at the time, HP lost out with a bid in the double-digit billions, while IBM won at $3.5bn. But IBM's move is a significant setback for HP regardless.

Many analysts said IBM's move was a powerful display of brains and brawn. HP's acquisition of Compaq, which included business it bought from Digital Equipment, gave the combined company more robust services that to some extent were competitive with IBM Global Services.

"The Compaq acquisition was HP's attempt to level the playing field, but now IBM just raised the bar," said Linda Cohen, managing vice-president at Gartner.

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