Andersen Courts Merger Partner.

Business Editors

ATLANTA--(BUSINESS WIRE)--May 30, 2001

Consulting Alert: Deloitte may be best fit

For years a dominating force by virtue of its own muscle, Andersen (formerly Arthur Andersen) has been holding exploratory merger talks with three other huge accounting/consulting firms, according to the latest edition of Consulting Alert (http://www.straffordpub.com/products/can/index.html).

Over the last 18 months, a team of executives at Andersen explored the pros and cons of business combinations with Ernst & Young, KPMG and Deloitte & Touche, informed sources told Consulting Alert.

While executives at Andersen liked the way Ernst & Young's client list and geographic markets complement Andersen's, a non-compete agreement likely would force a sale of Andersen's consulting practice in a deal with Ernst & Young, Consulting Alert reported. That non-compete agreement was drawn up during the sale of most of Ernst & Young's consulting operation to Cap Gemini. A similar problem would likely arise in a merger with KPMG, which spun off its consulting practice in an IPO several months ago. There are no such hurdles at Deloitte & Touche, according to the Consulting Alert story.

Arthur Andersen was the biggest of the so-called Big Five accounting/consulting firms until last year, when a devastating decision by an international arbitrator let Andersen Consulting, Andersen's then wholly owned consulting subsidiary, break away without paying a multibillion-dollar severance fee. Industry observers say the firm now known as Andersen lacks the capital needed to retain its former status, so its leaders are more amenable to considering a merger.

To read the Andersen coverage and other stories appearing in the latest Consulting Alert, go to http://www.straffordpub.com/headlines/consulting.html.

Consulting Alert, a twice-monthly newsletter, is the leading independent briefing on news and competitive intelligence for the management consulting profession. It is published by Atlanta-based Strafford Publications, Inc. (http://www.straffordpub.com). Strafford also publishes Public Accounting Report, the preeminent independent news source for the accounting profession, as well as 14 other newsletters for the accounting, legal and corporate security professions.

Consulting Alert (http://www.straffordpub.com/products/can/index.html) is available for a limited time at the discount rate of $247 - a $50 savings off the regular price of $297. Orders should be directed to: Strafford Publications, Inc., 590 Dutch Valley Road, NE, Postal Drawer 13729, Atlanta, GA 30324-0729; Phone: [phone]; Fax: [phone]; E-mail: [e-mail]; Website: http://www.straffordpub.com.