Everybody is enthusiastic about going into the new home with KPMG

John Prasetio, Andersen Asia

The plan, likely to see the Andersen name ditched outside the US, will be taken forward on a country-by-country basis, the firm said.

Besides agreement from local Andersen partners in 83 countries, tie-up details will also have to be cleared by national financial watchdogs.

The merger follows the indictment of Andersen's US arm over claims that, against a court order, it shredded documents relating to the collapse of energy giant Enron.

"Today we start the process of putting the last few weeks behind us," Andersen UK managing partner John Ormerod said.

Andersen's US office issued a statement that appeared to recognise the merger as inevitable.

"We appreciate the benefits of discussions between Andersen's member firm partners around the world and KPMG.

" While these discussions are underway, we will remain part of the Andersen Worldwide network until Oct. 1, 2002, or until this transaction is completed," it said.

New giant

For Andersen Asia, managing director John Prasetio said internal support for the deal had been "unanimous".

Global accountancy league

1: Pricewaterhouse Coopers, $21.6bn 2: Deloitte & Touche, $12.4bn 3: KPMG, $11.7bn 4: Ernst & Young, $9.90bn 5: Andersen, $9.34bn Data: Fee income 2001 Source: Lafferty Publications

"Everybody is enthusiastic about going into the new home with KPMG," Mr Prasetio said.

Tuesday's merger deal - encompassing Andersen operations in Europe, Africa, the Middle East, Canada, Asia and Latin America - has yet to be confirmed by KPMG.

Outside the US, Andersen and KPMG have a combined workforce of about 140,000 staff, and annual revenues of$12.2bn.

Speculation

While the Andersen name adorns 390 offices in 84 countries, the network's decentralised structure has allowed local operations to pursue individual merger deals, and distance themselves from the US unit.

A flurry of media reports in recent days has linked offices to talks with local rivals, and other firms, such as Deloitte Touche and Ernst & Young, ranked among accountancy's "big five".

But Andersen chiefs have attempted to hold the network together, to increase their bargaining power in merger talks.

And some observers believe that Andersen offices quitting the network would be obliged to pay a separation fee.

Competition concerns

In the UK, staff were told of the KPMG tie-up through a voicemail message.

UK accountancy league

1: Pricewaterhouse Coopers, �2,120m 2: KPMG, �1,160m 3: Deloitte & Touche, �796m 4: Ernst & Young, �626m 5: Andersen, �619m Data: Fee income 1999/2000 Source: Accountancy Age

But watchdogs at the Financial Services Authority have warned a UK Andersen-KPMG merger might raise competition concerns.

"We are concerned that having just four global firms would be damaging to choice," an FSA spokeswoman said.

Mr Ormerod said on Tuesday: "We are hopeful that regulators will understand the particular circumstances."

KPMG's roots

KPMG, which employs 100,000 people in more than 150 countries, is widely seen as the most EU-centric of the "big five" accountancy firms.

Of the four major accountancy firms which lie behind KPMG, one was rooted in Amsterdam, one in London and one in Germany.

The fourth, Marwick, Mitchell & Co, was founded in New York in 1897.

KPMG claimed revenues of $11.7bn last year, up from $10.7bn in 2000.