Andersen plans to ditch US

ANDERSEN predicts a merger 'within months' with KPMG to create the world's second-biggest accounting firm. The stricken US operation will be excluded. Andersen's London managing partner John Ormerod said: 'Today we start putting the last few weeks behind us.' He hopes for a deal by October.

Legal worries continue. Some Enron documents were destroyed by Andersen's London staff. It said they were only 'working papers'.

Andersen may find it hard to demand good terms. Accountancy Age magazine says KPMG partners generate nearly £500,000 more annual fees than Andersen's. Regulators fear a merger would leave four big firms dominant. Former Andersen partner John Tiner, of the Financial Services Authority, said it would be 'damaging to competition'.

European Union Commissioner Mario Monti favours keeping five big firms. But Andersen might collapse without a deal. A combined KPMG/Andersen would audit 32 of the top 100 UK companies, behind PwC (43), but well ahead of Ernst & Young (14) and Deloitte (11).