3 Andersen Units Join Rival Firms

Deloitte Touche Tohmatsu will combine with Arthur Andersen’s Italian practice and Ernst & Young will merge with the Malaysian and Luxembourg affiliates as the two firms divide Andersen’s non-U.S. units.

Deloitte has agreed to link with 12 of Andersen’s overseas practices and Ernst & Young has snapped up 15 after an agreement for a global merger outside the U.S. between Andersen Worldwide and KPMG International broke up last month.

Since then KPMG has reached agreements with just three Andersen businesses--South Africa, Japan and Nigeria. The fragmentation of the overseas business may benefit both Andersen employees and their new partners by preserving jobs and warding off lawsuits connected with the collapse of Enron Corp., industry experts said.

“It’s surprising how little KPMG has come away with, but they had mixed feelings every step of the way regarding liabilities,” said Damian Wild, editor of Accountancy Age, a British trade publication. “Andersen people have come out best by playing Deloitte and Ernst & Young off KPMG.”

Ernst & Young has taken over Andersen affiliates in Australia, New Zealand, Chile, Norway, Argentina, France, Switzerland, Russia, the Philippines, Singapore, Lithuania, Estonia, Latvia, Luxembourg and Malaysia.

Deloitte has picked up Andersen’s businesses in Taiwan, Britain, Portugal, Spain, Mexico, Brazil, Belgium, Sweden, the Netherlands, Canada and Denmark, as well as Italy. The British business is Andersen’s biggest outside the U.S., while the Spanish and Italian units are the biggest accounting firms in their respective countries.

And PricewaterhouseCoopers has acquired Andersen’s business in China, Hong Kong and in the Middle East, where Andersen operates in 12 countries, according to spokesman John Bunn.