KPMG Consulting Buys Units in Europe.(BUSINESS)(STOCK VIEW)

The Washington Times (Washington, DC), June 18, 2002 | Go to article overview

KPMG Consulting Buys Units in Europe.(BUSINESS)(STOCK VIEW)


Byline: Kristina Stefanova, THE WASHINGTON TIMES

KPMG Consulting Inc., the world's third-largest accounting firm, agreed last week to buy accounting firm KPMG International's German, Swiss and Austrian information-technology units for $685 million to build its European business, a move that will double the company's operations.

The news had little immediate effect on the stock, which has been trading in the midteens for the past two months. However, shares of KPMG Consulting, of McLean, rose 92 cents yesterday to close at $16.02 yesterday on the Nasdaq.

"Overall we can look at the acquisition announcement as a net positive for the company," said Joseph Vafi, analyst with Robertson Stephens. "When they did their IPO last year ... they didn't really have any operations in Europe because the parent company kept those."

KPMG Consulting was spun off last year by KPMG International. Now the local company is acquiring KCA, its sister information technology consulting firm, in addition to its previously announced plans to acquire several consulting units of Arthur Andersen LLP in 23 countries.

"We really did lack a hold on the European marketplace that would let us compete more equally with companies like Accenture," said John Schneidawind, spokesman for KPMG Consulting. "And so with the two recent acquisition announcements, we think we've gone a long way toward fulfilling the promise we gave to investors to become truly global players."

The purchase of the KPMG Europe units will be financed by issuing debt and equity, said the buyer, which plans to distribute 3.8 million options to workers in those overseas units. KCA employs 3,200 people in Europe. Its clients include global giants Deutsche Bank AG, Siemens AG and Bayer AG.

KPMG International was the first accounting firm to spin off its consulting units to remove perceived conflicts with their audit work. …

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