Deloitte 'poised to get Andersen'

ARTHUR Andersen, the top five accountancy firm struggling to save its reputation in the wake of the Enron collapse, is trying to sell itself to major rival Deloitte Touche Tohmatsu.

Sources close to the deal say an official announcement could come as early as this week. Although the terms of the deal have not yet been fixed, the Andersen name, once a symbol of corporate respectability but now tarnished by allegations of corruption and fraud at Enron, is likely to go.

According to The New York Times, talks between Andersen chief executive Joseph Berardino and his counterpart at Deloitte, James Copeland, got under way last week in New York. The major issue has not been how much Andersen is worth but how Deloitte can avoid the financial and legal liabilities that Andersen faces for its part in the Enron collapse.

Last week, Andersen was told it faced potential indictment on obstruction of justice charges in the Enron investigation because of all the documents its Houston office shredded last autumn. It may also incur fines from criminal damages and regulatory actions by the Securities and Exchange Commission as well as class actions by companies, shareholders and employees.

In order to get around the liabilities Deloitte may buy everything but Andersen's American business, leaving behind just a skeleton firm to face the Enron mess. Andersen has already offered some $750m (£527m) to shareholders seeking compensation but that is a long way short of the $3bn they are supposedly seeking. Experts agree Andersen needs to act quickly to staunch the loss of major clients. Delta Airlines is the latest company to announce it is dumping the firm as its auditor. It follows US pharmaceuticals group Merck, finance house Freddie Mac and car giant Ford.

Andersen is still accountant to around 2,500 companies in the United States although it is the smallest of the Big Five accountancy firms.

Andersen would not comment on any negotiations but a spokesman told the US newspaper: 'Andersen is considering many options to enable us to continue to successfully serve our clients and promote the career opportunities of our people.'

Deloitte is the second largest accounting firm and a merger with Andersen would put it just behind PricewaterhouseCoopers.