Andersen Near Deal on Consulting Unit
Struggling accounting firm Arthur Andersen is “nearing a tentative deal” to sell its consulting business to KPMG Consulting Inc., according to a person familiar with the negotiations.
An agreement could be announced this week, but Andersen’s legal and financial problems would make closing any deal tricky and time-consuming, the source said.
Andersen is under federal indictment for alleged obstruction of justice for destroying documents in connection with the collapse of former audit client Enron Corp.
Trial is scheduled to begin Monday in U.S. District Court in Enron’s hometown of Houston.
Andersen has announced its intention to return to its roots as a corporate auditing specialist by selling its management consulting and tax consulting businesses.
However, Andersen’s ability to conduct an orderly transformation is in doubt.
It has tried unsuccessfully to settle both its criminal case and a massive lawsuit filed by Enron shareholders.
A number of overseas affiliates already have cut their ties to Chicago-based Andersen, puncturing holes in the firm’s global network.
Many corporate audit clients also have fled for other firms, crimping Andersen’s revenue and increasing the chance it may have to file for bankruptcy protection, experts have said.
A purchase of Andersen’s multi-national consulting business would fit with KPMG Consulting’s goal to expand internationally.
The McLean, Va.-based firm was spun off from the Big Five accounting firm KPMG in 2000.
KPMG Consulting’s shares rose $1.41 to $17.50 on Nasdaq on Tuesday, a day when rival consulting firms also gained ground.
Randolph C. Blazer, the company’s president and chief executive, declined to comment on a possible deal with Andersen during a conference call to discuss quarterly earnings with analysts.
Andersen also declined to comment.
Also Tuesday, a House committee investigating the Enron affair refused to give Andersen documents related to interviews of Andersen’s chief Enron auditor.
Ken Johnson, a spokesman for the chairman of the House Energy and Commerce Committee, Rep. Billy Tauzin (R-La.), said the “information clearly is protected by the Constitution’s speech and debate clause.”
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Associated Press was used in compiling this report.
