Big Five - KPMG escapes Andersens' net
After weeks of intensive high-level negotiations, Arthur Andersen has abandoned its clandestine bid to poach KPMG’s Canadian practice, amid fears that as many as a quarter of KPMG partners would vote against joining.
Andersens blamed a two-week delay to KPMG’s partnership vote on the merger for creating insurmountable ‘disruption’ to the deal, which was first publicly revealed by Andersens near the end of last month. Had it gone through, the deal would have boosted Andersens’ revenues by around C$900m (#375m) this year and added more than 6,000 staff to its ranks.
Last Thursday, a Canadian court extended the voting deadline for KPMG partners from 9 April to 26 April, after David Knight, vice-chairman of KPMG in Canada, had sought an injunction.
According to an Andersens spokesman, the decision, made at the weekend by global managing partner Jim Wadia, came amid growing fears that Andersens would only just have cleared the 75% majority required to vote in favour of the tie-up. This would have left a significant number of KPMG partners outside the merged firm, and seriously undermined its authority.
Wadia said: ‘The key thing to worry about is the people. The two-week extension of the vote caused too much disruption for everyone involved.’
But Andersens stressed it was still committed to poaching other rival practices and incorporating them into its global structure.
The collapse comes less than a week after a wide-ranging KPMG revamp, when it announced plans to create two giant firms from its 23 national practices.