Ernst & Young and KPMG have abandoned their proposed merger after four months of talks.
Both firms blamed ‘increasing difficulties’ with the regulatory process for the surprise decision. The firms said the regulatory process, with investigations in the US, Europe, Australia, Switzerland, Canada and Japan, would have taken many months incurring considerable costs and disruption to client service and with the possibility of different decisions in different countries.
They added that the regulatory issues together with the costs and resources required to merge the cultures of the two firms have made the proposed merger impractical.
A senior source in one of the firms said the decision to call off the deal would benefit audit, and forensic departments. ‘Conflicts of interest are very important to us,’ he said. ‘We were concerned when the Bank of England said its use of Section 39 reports could be compromised by the mergers. We could have lost a lot of work in that area, but now if the Coopers/PW merger goes ahead there will be even more work as we pick up the spoils from their conflicts.’
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