Andersen UK seeks refuge in Deloitte

DELOITTE & Touche has pipped KPMG to take over the UK arm of Andersen, the beleaguered US accounting firm. More than 1,000 Andersen staff are expected to lose their jobs in the next three months as Deloitte takes control.

No money will change hands under the transaction, in which Andersen UK staff and partners will join Deloitte. Partners of both firms voted 'overwhelmingly' in favour of the deal, which will propel Deloitte to number two in the auditing league tables.

KPMG had been in talks to take over Andersen, which has been badly dented since the collapse of Enron, the US energy trader where it was auditor. Earlier talks between Deloitte and Andersen collapsed three weeks ago.

Deloitte senior partner John Connolly will remain in charge of the enlarged firm. It will trade under the Deloitte name. Some Andersen partners will join the board and executive team.

Connolly said: 'This is a very exciting transaction for Deloitte and our people. Clients will particularly benefit from our enhanced capabilities to advise in areas such as tax, corporate finance and human capital.'

The deal requires regulatory clearance from the competition authorities, which are bound to take an interest because it reduces the Big Five auditing firms to four. The combination may throw up some client clashes. Deloitte audits Dixons, while Andersen audits Carphone Warehouse.

Since the Enron scandal, Deloitte has already snapped up Andersen operations in Spain, Portugal and most of Latin America.