E&Y, Andersen to merge in Australia

By Geoff Hiscock
CNN Asia Business Editor

SYDNEY, Australia (CNN) -- Ernst & Young and Andersen Australia have agreed to merge their operations.

Thursday's move is the latest in a series of deals being struck around the world by Andersen partnerships following the disastrous Enron collapse and the involvement of Andersen's U.S. practice in it.

Ernst &Young Australia's chief executive Brian Schwartz will lead the combined entity, to be known as Ernst & Young.

It will be Australia's second largest professional services firm, with revenue of about $400 million a year. PricewaterhouseCoopers is the country's leader with about $690 million of annual revenue.

Schwartz said the proposed integration, likely to be completed in May, was a positive move for both firms.

It would "provide certainty and opportunity for Andersen's people and clients," he said.

Andersen chief executive Garry Hounsell echoed his call, adding the firm's Australian staff and clients had been "extremely loyal" in recent weeks.

Global ties

"Through this integration with Ernst & Young, we can now move forward as part of a larger organization, with strong global ties. This will benefit Andersen clients and also give our people new enhanced opportunities for the future, " Hounsell said.

Andersen held merger talks earlier with two other Australian practices, KPMG and Deloitte Touche Tohmatsu, but these broke down over a number of concerns, including the liquidation of failed insurance company HIH.

Schwartz said the deal's approval was subject to the completion of normal due diligence, regulatory approval and partner votes, which would occur during the coming weeks.

Subject to these, he said, the new entity would begin operations from mid to late May 2002.