GLOBAL – Hewitt Associates could be a potential buyer for rival consulting firm Watson Wyatt, according to financial analysis website

Watson Wyatt & Co.’s shares are “too cheap” according to analyst Lenny Dykstra – who reckons Watson’s Illinois-based competitor could be in the frame.

“The ageing of the population makes retirement issues more crucial, thereby helping Watson,” he argues. “At 17 times trailing earnings, the stock is too cheap.

“Either the company persuades investors to make this number higher or it gets acquired. I believe Hewitt Associates is a possible buyer.” A spokeswoman for Hewitt declined to comment. Watson spokespeople were not immediately contactable.

Hewitt has made more than $1bn of acquisitions in the past few years. In 2002 it bought the UK’s Bacon & Woodrow for $259m. And last year it bought human resources firm Exult for around $776m.

But it has not dropped any hints that it is planning any acquisitions. In August it said human resources business process outsourcing would be the “major driver in the growth of our revenue and profits over the next several years".

Watson Wyatt last month completed the acquisition of its UK-based affiliate firm Watson Wyatt LLP – a move it said would “increase our long-term profitability and stockholder value". In the fourth quarter of fiscal 2004 Watson repurchased more than 800,000 shares – giving investors around $21m.

Dykstra cited the consistency of Watson’s numbers, its zero debt, forward price/earnings ratio of 14.36 and return on equity of 21.44%.

Yesterday Hewitt said the transfer of Philips’ Dutch pension administration should be completed by the end of the year.