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Deloitte, Andersen talked
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October 31, 1997: 6:45 a.m. ET
Officials with both firms say management problems nixed deal
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NEW YORK (CNNfn) - Deloitte & Touche and Andersen Worldwide informally met over the last two weeks to discuss a possible merger. However, uncertainties over Andersen's continuing management problems apparently stalled any possible deal.
Partners with both firms told The Wall Street Journal that the two decided to discuss a possible merger following a wave of combinations in the accounting industry.
The Big Six of top accounting firms is shrinking to the Big Four now that Ernst & Young and KMPG Peat Marwick as well as Coopers & Lybrand and Price Waterhouse each announced they would merge. The Ernst & KPMG deal would create the world's largest accounting and consulting firm.
A Deloitte and Andersen merger would create a firm with $18.8 billion in revenues, putting it slightly over the top of Ernst-KPMG. It would also make Andersen the world's largest accounting and consulting firm.
Deloitte officials told The Journal that that the two held merger talks earlier this year, but they ended them when Ernst officials demanded 65 percent of the combined firm's voting shares.
After the newspaper published the report, Andersen issued a statement denying the discussions took place.
Deloitte's chairman and chief executive officer J. Michael Cook told the newspaper Deloitte has held merger discussions with several firms, including Andersen. However, he said Deloitte's board recently decided against merging with anyone.
Arthur Andersen managing partner Jim Wadia said Andersen does not plan on any more merger discussions with Deloitte. However, he pointed out Andersen officials talk to competitors frequently in the normal course of business.
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