Although exact details of discussions were unknown, with more than one firm involved in discussions, the prospect of different practices or national offices being split off has become a serious option for the firm.
Andersen was said to be considering filing for ‘Chapter 11’ insolvency protection in the US, a route as yet untested for limited liability partnerships.
A massive hurdle to a merger or takeover would centre on how a rescuer could protect itself from any potential legal claims against Andersen, suggesting the US operation could be separated from the remainder of the global operation.
Spokespeople for E&Y and Andersen said they would not comment on speculation, while Deloittes issued a statement saying it was currently going through a ‘scenario planning exercise’.
However, a source at Andersen said the merger speculation was ‘meaty’.
There have been several precedents where firms have merged with different partnerships in separate countries. When Deloitte Haskins & Sells merged with Coopers & Lybrand in the UK, the rest of its international network teamed up with Touche Ross, later to become known as Deloitte & Touche.
On Monday, Paul Volker, hired by Andersen to review its business, said the firm’s audit arm should be separated from its consultancy practice.