Andersen, KPMG executives try to rescue Asian merger

Andersen, KPMG executives try to rescue Asian merger

Peh Soo Hwee, Reuters, Singapore

Senior executives of troubled accounting firm Andersen huddled for a second round of talks in Singapore on Tuesday to salvage a proposed merger with KPMG in Asia after several Andersen units defected to other firms.

Sources close to Andersen said issues raised at the meeting

included concerns about the KPMG proposal, discussions on the options available and a debate of whether a vote should be taken.

KPMG was pressing to discover how many Andersen units would accept its proposal, they said.

Colin Holland, KPMG International's Brussels-based chief operating officer, flew into Singapore, his second visit in as many weeks, to resume talks with Andersen officials from nine Asian countries after the defections.

"All Asian units of Andersen are present at the meeting today except for China, Hong Kong, New Zealand and Australia," Andersen's Asia Pacific Area Managing Partner John Prasetio told reporters milling outside a conference room at the plush Ritz Carlton Hotel.

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

The firm has said it was in talks with KPMG on a possible merger of their most important non-U.S. businesses.

The Asia-Pacific merger of Andersen and KPMG would have created Asia's largest accounting firm with about US$2 billion in revenues and more than 28,000 staff, company officials said last week.

But Andersen's Hong Kong and China units have decided to combine with rival PricewaterhouseCoopers, while Andersen in New Zealand has reached a similar agreement with Ernst & Young.

On Monday, the Australian units of KPMG and Andersen ended merger talks because of a conflict of interest arising from their roles regarding failed insurer HIH Insurance Ltd.

Andersen executives leaving the closed door meeting said representatives from various ASEAN nations as well as officials from Japan and Taiwan were present.

"Everyone is in talks with KPMG. But South Korea, Thailand and Taiwan are progressing further ahead in talks with KPMG," said one Andersen executive, who declined to be identified.

"We are focusing on the KPMG proposal. It is not healthy to focus on so many at the same time," he said.

The Asian official said he will be flying to London for a global Andersen board meeting on Thursday, where the 18 board members including three from Asia will meet.

He did not say what the board meeting would be about.

Senior executives from 13 Asian units of Andersen had backed a proposed merger with KPMG in the region after a two-day conference in Singapore last Tuesday. But soon after the conference, the proposed merger unraveled at the seams.

One Andersen official said she was hopeful the rest of the Andersen Asian units would go for the proposed merger with KPMG, though they were aware of ongoing discussions with other firms.

"We try to support the global deal, the merger with KPMG...but it may not be 100 percent," said the official, who like many people at the meeting did not want to be identified.

One executive said the meeting should end with some progress on a deal with KPMG, but said it was unlikely all the various units would decide on the matter.