US networking vendor Cisco Systems today said it will invest more than $US1 billion in US accounting and consulting firm KPMG LLP, to form a venture that advises companies on how they can take advantage of the Internet.
In a deal which the companies expect to complete in September, Cisco and KPMG LLP have agreed to form KPMG Consulting. Cisco is taking a share of slightly under 20 per cent in the new venture, with KPMG LLP taking the remainder, confirmed George Ledwith, a spokesman for KPMG.
Although US-based, the company will serve customers worldwide. The companies have signed a letter of intent, and KPMG's board of directors has approved the move, according to a joint statement issued today.
KPMG LLP is the US member firm of KPMG International, which advises companies on tax, accounting and business issues.
The agreement calls for KPMG to create six technology centres, where some 4000 Internet consultants will develop Net-based data, voice and video services for Cisco customers. For its part, Cisco will provide the hardware to develop these products and services, and will use its sales force of 6000 people to market them.
The transaction will be subject to government approval. Questions remain as to whether the US Securities and Exchange Commission will approve the deal, as it could flout auditor independence rules, according to a report in the Wall Street Journal.
KPMG, however, appears unconcerned by such speculation since it does not serve as Cisco's auditor.
"We do not have any independence concerns and are proceeding," said KPMG's Ledwith.
KPMG has served as a consultant to Cisco on developing its Internet strategy, the companies said.
KPMG in the US already has a long-standing alliance with Cisco. One part of that alliance is the Cisco Resource Network, which offers mid-sized businesses access to Internet-based applications.