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Andersen Asia units back merger with KPMG

Senior executives from 13 Asian units of Andersen have backed a proposed merger with rival KPMG in the region after a two-day conference in Singapore ended on Tuesday.

Andersen is seeking a merger to ensure its survival as it faces investor, and possibly criminal, litigation over its audit of collapsed energy giant Enron.

"What we confirmed during our discussions is that there is a very strong synergy between our two organisations, we have complementary strength," KPMG International's chief operating officer Colin Holland said.

"From the Andersen side, the support has been unanimous. Everybody is enthusiastic about going into the new home with KPMG," Andersen's area managing director John Prasetio said.

If successful, the Asia-Pacific merger would create Asia's largest accounting firm with about US$2 billion in revenues and more than 28,000 staff, KPMG and Andersen officials said.

Prasetio told reporters Ernst & Young had also proposed to merge with Andersen Asia-Pacific, but this was rejected because the firm was looking for a global merger with KPMG.

The talks, some of which began on Sunday, also concluded that senior executives will return to their respective countries to continue further discussions.

"It has been a very useful opportunity for us to meet each other and to share ideas with each other. We have agreed we will proceed with discussions now on a country-by-country basis," KPMG's Holland said.

Holland said many KPMG senior partners were unable to attend the discussions in Singapore and would be briefed later.

KPMG BRANDING

"We believe very confidently that the combination of KPMG and Andersen within the Asia-Pacific region will create a very, very strong firm and will enable us to compete very successfully in this market place," he said.

Holland also said it had been agreed that the KPMG brand was the one that would be followed for the time being.

From the KPMG perspective, he said the firm still had to go through a detailed legal and regulatory review.

"We need to assess our competitive positioning from an anti trust perspective. There are lots and lots of different issues that we would have to go through and have to analyse," Holland said.

"But I think bringing together two organisations...has only positives to add," he said.

On the target date for completing the merger, Holland said October 1 had been mentioned.

"We will start the process now in Asia and hopefully put things along various time lines," he said.

Embattled auditor Andersen has said it was in talks with KPMG on a possible merger of their most important non-US businesses, as the Enron collapse threatened to undermine Andersen worldwide.

In a statement after Andersen China earlier said it was in talks with unnamed rivals, KPMG Germany chief Harald Wiedmann said the two groups would explore merging in Canada and the most important countries of Europe, Asia and Latin America.

"Such a merger would generate considerable synergies in terms of geographical presence, sector know-how and services portfolios," Wiedmann said in a statement issued by the German units of the two, as US regulators turn the screws on the Big Five auditor for its part in the Enron collapse.

Last week rivals Deloitte Touche Tohmatsu and Ernst & Young rejected the idea of a merger, the first two of the Big Five to say they definitely will not pursue the Chicago-based firm as long as Andersen faces possible litigation over Enron.

In the United States, Andersen faces criminal charges, a one-year suspension on new government business and a swelling list of multinationals defecting to competing auditors.

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