When news of discussions between the firms were made public last month, PwC hoped to get $17 to $18 billion for its consulting unit. Since then, however, like many high-tech stocks, HP's share price has taken a beating. According to a report by the Financial Times, the tech company's shares, valued at over $120 when talks were announced in September, fell 20 percent in the month to close at $96 on Friday.

Neither side would comment, but people close to the talks reportedly said that the cash component of the deal, which was originally planned to be about half the asking price, would have to be raised in order to preserve the headline size of the transaction, FT said.

A large cash component is seen as good for both sides, with HP avoiding some of the earnings dilution that would result from issuing more shares. However, if the stock component remained half the total, PwC's consulting practice could be valued by HP as low as $15 billion, which could open the way for other bidders to step in, FT reported.

But a tax break as large as $ 4 billion as a result of the structure of the deal could sway HP to come up with more cash, FT said. The tax savings stem from rules on goodwill amortization that apply when the acquisition target is a private partnership, rather than a listed company, according to the report.

-- SmartPros News Staff

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