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Wednesday, 10 April, 2002, 14:30 GMT 15:30 UK
Deloitte snaps up Andersen UK
Andersen's John Ormerod (left) and Deloitte's John Connolly
Andersen's John Ormerod (left) and Deloitte's John Connolly
Accountancy firm Deloitte and Touche has clinched a deal to take over the UK operations of its beleaguered rival Andersen.

The proposed tie-up, which is still subject to regulatory approval, has received the "overwhelming" backing of the two companies' partners, Deloitte UK said in a statement.

Shortly after the deal was announced, two of Andersen UK's partners were named in a lawsuit in the United States, as the BBC's BUsiness Today team has discovered.

It is being brought on behalf of shareholders who are trying to recover money they lost when the US energy giant, Enron, collapsed. The company's accounts were audited by Andersen Worldwide's US arm.

US shareholders sue UK partners

UK partners Philip Randall and Roman McAlindon are named in the lawsuit, along with 24 other Andersen employees.

Andersen UK has always denied any wrongdoing and said the two men were "bemused and astonished" to have been added to the legal action.

Last month, criminal charges were levelled at Andersen in the US after it admitted that some of its executives shredded Enron-related documents while the energy firm was being investigated by stock market regulators.

Some documents were also destroyed at Andersen's UK offices, but the UK practice has said the shredding was carried out without its knowledge by employees on temporary secondment from the US.

Merger scramble

The accountancy firm has been exploring possible rescue deals with its rivals in recent weeks.

Andersen Worldwide recently announced a global tie-up outside the US with KPMG, another accounting firm.

However, the planned merger quickly collapsed as Andersen partnerships in a string of countries decided to link up with other rivals instead.

Jobs impact

Under the latest deal, Andersen UK and Deloitte and Touche would merge, but the combined firm would operate under the Deloitte name.

John Connolly, the head of Deloitte's UK practice, would stay on as chief executive of the enlarged firm, while some Andersen partners would join the company board.

"We see a strong cultural fit between the firm's partner groups, and are confident that our partners and staff will prosper under the Deloitte banner," said Andersen UK's managing partner John Ormerod.

The two companies hope to complete the merger by 1 July this year.

An Andersen spokesman said it was too early to tell whether the move will result in job losses.

Andersen's UK practice currently employs 6,300 people, including 500 partners, while Deloitte UK employs a similar number.

The proposed tie-up between Andersen and Deloitte's UK operations follow the announcement of merger plans between the two firms' Brazilian and Mexican practices earlier this week.

See also:

08 Apr 02 | Business
Enron victims prepare legal action
01 Apr 02 | Business
More firms flee Andersen
29 Mar 02 | Business
Andersen backs rescue plan
30 Mar 02 | From Our Own Correspondent
Andersen's angry accountants
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