PwC Consulting Unit to Offer Stock
The consulting arm of PricewaterhouseCoopers, the nation’s largest accounting firm, filed papers Thursday for a stock offering that would separate the consulting business from its parent company.
The offering, announced in January, is aimed at freeing the consulting unit from new federal rules that restrict the kinds of services that accounting firms can provide to the companies whose books they audit.
The rules, imposed by the Securities and Exchange Commission, are intended to eliminate any real or perceived conflicts of interest between accounting firms and their audit clients. Arthur Andersen, which audited Enron Corp.’s books for years, has been indicted for destroying Enron documents after the energy giant’s financial troubles deepened.
Other accounting firms also are taking steps to separate their consulting businesses from their audit practices. Deloitte Touche Tohmatsu said it would split those business groups, and KPMG Consulting, which had split from its former parent company KPMG, is planning to change its name to reinforce the separation.
The PricewaterhouseCoopers unit’s stock offering, which probably would come in mid-August, would raise at least $1 billion. Brokerage Morgan Stanley will handle the offering, and the stock is expected to list on the New York Stock Exchange.
PricewaterhouseCoopers’ consulting business filed the registration papers under the name PwCC Ltd. but said in the filing that it would change its name before the offering.
In the filing, PwCC said its business was being hurt by clients’ concerns about running afoul of the new federal rules on auditor independence. PwCC said its average monthly booking from clients that also were audit clients of PricewaterhouseCoopers declined by about 57% in the quarter ended March 31 compared with the average monthly amounts in the last half of 2001.
PwCC had $424 million of income, before distributions to partners, in the year ended June 2001, a 30% decline from the previous year. Revenue was $7.5 billion, up 5% for the year, compared with a 15% rise the previous year.
“The business has a boom-and-bust nature,” said Marshall Cooper, president of Kennedy Information, a research firm that follows the consultant business.
Bermuda-based PwCC has 32,000 employees worldwide.
Briefly
Rates earned on U.S. savings bonds are falling: The Treasury said the annualized yield on Series EE bonds issued on or after May 1, 1997, was cut to 3.96%, down from 4.07%. The new rate will be in effect through Oct. 30. The Treasury adjusts the rate twice a year, Nov. 1 and May 1, based on market interest rates.
