PricewaterhouseCoopers LLP said it agreed to buy Diamond Management & Technology Consultants Inc for $378 million to expand its advisory business.
The deal, which has been approved by both boards, values Diamond at $12.50, a 31% premium to the stock’s closing price of $9.54 on Monday.
Shares of Diamond, which went public in February 1997 through a rights offering, jumped as much as 31% to $12.50 before the bell on Tuesday. They have lost 18% of their value in the last one month after touching a year high in mid-July.
Chicago-based Diamond, which has offices in Hartford, New York, Washington DC, London and Mumbai, posted quarterly revenue of $52 million earlier this month.
Diamond, which employs more than 500 consultants worldwide and earns a third of its total revenue from financial services consulting, had also said it expects continued revenue and earnings growth for the rest of fiscal 2011.
The deal is expected to close in the fourth quarter, following which Diamond will join the PwC Advisory practice, the global accounting firm said in a statement.
If the merger agreement is terminated, Diamond may be required to pay PwC a termination fee of $9 million, Diamond said in a regulatory filing.
Last month, Diamond’s bigger rival Hewitt Associates Inc agreed to sell itself to Aon Corp in a $4.9 billion deal.
PwC was advised by Perella Weinberg Partners LP and Davis Polk & Wardwell LLP, while Diamond was advised by Morgan Stanley & Co Inc and Winston & Strawn LLP.