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In a move calculated to bolster its already significant consulting business, International Business Machines Corporation has announced that it will pay $3.5 billion for PwC Consulting, the consulting arm of Pricewaterhouse-Coopers. The sale is the third attempt by the parent company to spin off its consulting business. A sale to Hewlett-Packard Company for a reported $18 billion fell through in late 2000, and an initial public offering was scrapped this past July as a result of the dismal stock market. The sale was spurred by the dim view that both regulators and the private sector have taken lately of firms that combine auditing and consulting services. Indeed, audit clients of PricewaterhouseCoopers had been looking elsewhere for consulting services. The deal is structured so that audit partners in the parent company will receive $2.7 billion in cash. The consulting partners will get $800 million in stock and notes, and will become IBM employees. The move is another step in IBM’s evolution from computer manufacturer to technology consultant. The acquisition will give the company an immediate presence in business consulting, an area where it has been weak. For acquiror International Business Machines Corporation (Armonk, New York) In-house: The company declined to identify its internal team. Skadden, Arps, Slate, Meagher & Flom (New York): Corporate: John Adebiyi, Peter Allan Atkins, Howard Ellin, Michael Hatchard, counsel John Besser, and associates Chad Langley, Paola Lozano, James Meschewski, Joseph Rotter, and Kenneth Wolff. Intellectual property: Stuart Levi, Rita Rodin, and associates Joseph Chalom, Jose Esteves, Jared Grusd, and Edward Sadtler. Antitrust: John Nannes. Employment: John Furfaro, Neil Leff, counsel Berit Freeman, and associates Brian Kaplan, Richard Kidd, and Manan Shah. Real estate: David Nagler and associates Adam Endick and Michael Jackowitz. Tax: J. Phillip Adams, Paul Oosterhuis, and associate Patrick Chu. Litigation: associate Scott Musoff. (Adebiyi and Hatchard are in the firm’s London office; Besser is in Boston; and Nannes and Oosterhuis are in Washington, D.C.) IBM turned to Skadden for this deal because its regular outside counsel, Cravath, Swaine & Moore, is advising PricewaterhouseCoopers. For target PwC Consulting (New York) In-house: General counsel Ronald Hauben. For parent PricewaterhouseCoopers (New York) In-house: Global general counsel Lawrence Keeshan and Helen Smithson. Davis Polk & Wardwell (New York): Corporate: Luciano Fatoi, Paul Kingsley, Jeffrey Small, and associates Maurice Blanco, Toby Buchanan, Jan Bystrom, Gregory Jones, Nicole Jones, Michael Kaplan, Elizabeth Pinho, and Francis Zou. Real estate: counsel Joseph Sperber and associates Kevin Kim and Joshua Malkin. Tax: Dana Trier and associates Joanne Mork and Philip Wagman. Employment: Barbara Nims and associates Erin Cho, Renata Ferrari, Kyoko Takahashi, and Jeffrey Wool. Equity derivatives: John Brandow, Deanna Kirkpatrick, and associates Ashraf Ibrahim, Paul Robinson, Erika White, and Joyce Xu. The firm won the engagement in a beauty contest. Cravath, Swaine & Moore (New York): Corporate: Robert Townsend III, James Woolery, and associates Thomas Auth, James Chen, Stephen Cho, M. Breen Haire, Michael LaGatta, Tatiana Lapushchik, Cameron MacDougall, Brannen McElmurry, and George Stephanakis. Tax: William Brannan and associates Lauren Angelilli and Eric Hilfers. Benefits: associate Scott Price. The firm has long advised PricewaterhouseCoopers, and has been involved in the spin-off of the consulting unit since the proposed Hewlett-Packard deal. Linklaters (London): Corporate: Anne Drummond, Richard Godden, and Tom Wethered. In addition, lawyers in the Paris, Lisbon, Madrid, Brussels, Antwerp, Frankfurt, Luxembourg, Stockholm, Prague, Moscow, Hong Kong, Bangkok, Shanghai, Singapore, and S�o Paulo offices of Linklaters worked on the deal, as did additional law firms in other parts of the world. OUTLOOK At press time, PwC consulting partners around the world were dissolving their current employment contracts and entering into new agreements with IBM. The companies were also awaiting approval from the European Union.

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