IBM To Acquire PwC Consulting

 The two companies have signed a definitive agreement approved by IBM's board of directors and  PricewaterhouseCoopers' leadership board. Under the terms, IBM will pay PricewaterhouseCoopers an  estimated purchase price of $3.5 billion in cash and stock. The transaction is subject to regulatory approvals  and approval of local PwC firms through votes of their partners, and is expected to be concluded around the  end of the third quarter. PwC Consulting will no longer pursue its planned initial public offering.

 "The client is the driving force behind today's announcement with PwC," said Samuel J. Palmisano, IBM  president and chief executive officer. "Clients are not only looking for innovative ideas to improve their  businesses, they are seeking a partner with deep business expertise and the ability to exploit leading, open  standards-based technology to turn these ideas into bottom-line business benefits. This acquisition  underscores our commitment to this strategy.

 "Our consulting and services professionals will provide a powerful capability, beginning with business  innovation and extending through implementation, to help clients improve their competitiveness and drive  sustained growth and profitability," Palmisano said. "Together with the world-class innovations of IBM  Research and our business partner offerings, this new business unit will deliver comprehensive end-to-end  business and technology solutions."

 Samuel A. DiPiazza, Jr., chief executive officer of PricewaterhouseCoopers, said, "This transaction fulfills our  commitment to fully separate PwC Consulting from PwC. It will unleash the consulting unit from the regulatory  restraints of our industry, and will allow the business to reach its full potential. Combining PwC Consulting  with IBM not only fully achieves the goals we set for the separation, it provides clients and our professionals  with greater opportunities and access to innovative solutions."

 PwC Consulting, with estimated fiscal-year 2002 consulting revenues of approximately $4.9 billion, excluding  client reimbursables, and some 30,000 employees, will be combined with the Business Innovation Services  unit of IBM Global Services, creating a new global unit. Ginni Rometty, currently general manager of IBM  Global Services - Americas, will become general manager of the new unit, reporting to Doug Elix, senior vice  president and group executive, IBM Global Services.

 This new global business unit will pull from the extensive portfolio of IBM capabilities to offer clients  innovative, integrated solutions through business and technology consulting, industry insight and business  process expertise together with the comprehensive services capabilities of the rest of IBM Global Services.

 "Creating a single capability that fuses business and process insight with information technology provides the  unique advantage our clients are reaching out for," said Doug Elix, senior vice president and group executive,  IBM Global Services. "This is an exceptionally good fit -- both strategically and culturally. Our businesses  complement each other and we speak the same language."

 Greg Brenneman, president and chief executive officer of PwC Consulting, said, "I'd like to congratulate IBM for  making this bold, strategic move. Everyone wins in this transaction -- our clients, our employees and IBM.  When I came to PwC Consulting, I knew that aligning with a company such as IBM was in everyone's best  interest. IBM has positioned itself to be the industry leader for many years to come."

 Throughout the process, IBM and PwC have been working with the SEC staff to establish procedures under a  no-action letter to comply with SEC auditor independence rules.

 IBM is the world's largest information technology company, with more than 80 years of leadership in helping  businesses innovate. IBM Global Services is the industry's largest business and information technology  services provider, with approximately 150,000 professionals serving customers in 160 countries and annual  revenue of $35 billion (2001). IBM Global Services integrates a broad range of capabilities -- services,  consulting, hardware, software and research -- to help companies of all sizes realize the full value of  information technology.

 PricewaterhouseCoopers is the world's largest professional services organization. Drawing on the  knowledge and skills of more than 150,000 people in 150 countries, PricewaterhouseCoopers helps its  clients solve complex business problems and measurably enhance their ability to build value, manage risk  and improve performance in an Internet-enabled world.

 PricewaterhouseCoopers refers to the member firms of the worldwide PricewaterhouseCoopers  organization.

 Editors: To hear IBM and PwC Consulting executives discuss this announcement, go to  http://www.ibm.com/investor/events/ir0702/ at 5:00 p.m. EDT today.

 Forward-Looking and Cautionary Statements
 Except for the historical information and discussions contained herein, statements contained in this release  may constitute "forward- looking statements" within the meaning of the Private Securities Litigation Reform Act  of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual  results to differ materially, as discussed in the company's filings with the Securities and Exchange  Commission.

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Roger Warner
IBM Media Relations Mger, EMEA
+44 7957 167 825
rwarner@uk.ibm.com