The French unit of accounting firm Andersen has agreed to merge with rival Ernst & Young.

The deal, the latest in a series of regional merger announcements, represents a further blow to early plans for a worldwide merger between Andersen and KPMG.

KPMG had hoped to tie up with all Andersen's non-US subsidiaries, a deal seen as the best hope of salvaging those parts of the firm untainted by the collapse of Enron, whose books Andersen audited.

But the KPMG-Andersen deal started to unravel as soon as it was announced, as a series of Asian units voted to merge with other partners.

Deal disintegrates

Now, the rebellion has spread to Andersen units in Europe and the Americas.

In the past week, Andersen subsidiaries including the UK, Spain, Canada, Argentina and the Baltic States have agreed deals with partners other than KPMG.

Now, the only large unit with intact plans to merge with KPMG is Andersen Germany, but that deal is still far from complete.

Ernst & Young and Deloitte & Touche have been the biggest beneficiaries from the deal's disintegration, with industry leader PricewaterhouseCoopers remaining mainly aloof.