From: Antoun Nabhan (antoun@arrayex.com)
Date: Thu Aug 10 2000 - 07:01:33 PDT
I figured this was FoRK-relevant because KPMG is one of that largest shop
of bit-slingers for hire, and it's a sign of the times that they feel the
need to do an IPO, even though their service-by-the-hour business model
doesn't necessarily lend itself to being a high-growth company. Is there
more than one bullet in their securities-offering gun?
KPMG Consulting leaves the Big 5 nest
By Reuters
Special to CNET News.com
August 7, 2000, 11:50 a.m. PT
WASHINGTON--KPMG Consulting, formerly part of one of the Big 5 accounting
and consulting companies, today set its initial public offering.
The company will offer 324 million shares of common stock in a projected
price range of $6.75 to $8.75 per share.
In an amended prospectus filed with the Securities and Exchange Commission,
KPMG Consulting said it plans to offer about 89 million shares, while its
parent company KPMG and its partners will offer the remaining 235 million
shares.
The McLean, Va.-based company expects to raise about $660 million in net
proceeds from the sale of its shares, according to the prospectus. It will
not receive any proceeds from the sale of shares by its parent company.
KPMG's move to spin off its consulting arm comes as the SEC is working on a
plan to allay its concerns over the scope of services that companies are
providing the clients they audit.
The regulatory agency contends this situation can create a conflict of
interest, and ultimately undermine the financial process.
Arthur Andersen and Deloitte & Touche, two other Big 5 companies, have
joined KPMG in the recent battle to delay the SEC from adopting a plan, in
hopes that a new administration in the White House will derail it.
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KPMG has said the separation of its consulting division, which specializes
in helping companies with their Internet strategies, is not directly
related to the regulatory concerns.
The company said in the prospectus that its parent company will reduce its
stake in the unit to 17.9 percent from 88.5 percent "in order to assure
that we will not be subject to the rules and regulations governing the
independence of auditors from their clients."
Within five years of the IPO, KPMG and its partners will completely divest
themselves of any common shares they hold and will not sit on its board of
directors.
KPMG Consulting has an alliance with Cisco Systems, will gain a 19.9
percent hold in the company with 117.8 million shares, according to the
prospectus.
KPMG Consulting plans to use the net proceeds from the IPO to repurchase
shares of Series A preferred stock and repay outstanding debt. It will also
use the money for working capital and general corporate purposes, including
possible acquisitions.
There will be about 591.9 million shares outstanding in the company once it
goes public, giving it an initial capitalization of about $4.6 billion,
based on a median price of $7.75 per share.
The Pentagon, the State Department, Yale University and various Fortune
1000 companies are among KPMG Consulting's more than 2,000 clients
The company has applied to trade its shares on the Nasdaq under the symbol
"KCIN."
KPMG, the parent company, has granted underwriter Morgan Stanley Dean
Witter the option to buy 48.6 million additional shares to cover
over-allotments.
Story Copyright ©2000 Reuters Limited. All rights reserved.
Antoun Nabhan
VP of Finance, Arrayex, Inc.
617.901.8871
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