KPMG Consulting to buy Arthur Andersen units

KPMG Consulting has signed a letter of intent to acquire the business consulting units of Andersen Worldwide's member firms, the company announced May 8.


The letter of intent is an offer by KPMG Consulting of McLean, Va., to acquire as many as 23 independent consulting units of Andersen Worldwide of Chicago for up to $284 million.


In addition to the purchase price, KPMG Consulting plans to issue up to 6.5 million shares of stock over a three-year period to Andersen partners who join the company in connection with the transaction.


The agreement covers the acquisition of consulting practices of Andersen Worldwide member firms in Europe, the United States, Asia Pacific and Latin America. KPMG Consulting already has completed the purchase of Andersen consulting practices in Hong Kong and China.


The acquisition of the business consulting practice of Arthur Andersen LLP, a unit of Andersen Worldwide, in the United States is subject to the satisfactory resolution of potential liability issues.


The Andersen business consulting units act as systems integrators and had a combined net revenue of about $1.4 billion in fiscal 2001, according to KPMG Consulting.


The proposed acquisitions would strengthen the ability of KPMG Consulting to serve its global clients, said Rand Blazer, the company's chairman and chief executive.

The acquisitions would extend the company's geographic reach, increase its strength and coverage in the industries it serves, hike its client base to more than 700 of the Global 2000 companies and give it a work force of more than 16,000 employees, company officials said.


Tom Meagher, vice president of equity research at BB&T Capital Markets, Richmond, Va., said KPMG Consulting may need to consolidate its work force if redundancies are discovered following the acquisitions. "There may be some winnowing of what they are buying," he said.