Andersen is in last-ditch rescue talks with two of its largest rivals as the scandal-hit professional services firm fights to save itself from collapse.
The world's fifth-largest auditing group is attempting to thrash out a possible merger with rival audit firms Ernst & Young and Deloitte Touche Tohmatsu amid fears that it will splinter into smaller parts.
Under the terms of the proposed deal, Andersen's US business would file for Chapter 11 bankruptcy. The merger partner would then buy Andersen's US assets, leaving the bankrupt US business with cash to settle claims against it.
Andersen is hoping to announce an agreement with one of the prospective partners in the next few days.
However, the talks could collapse and even if a deal is announced, many of the details would still need to be hammered out.
The dramatic developments come as Andersen attempts to stem an exodus of clients following its implication in the collapse of Enron, the bankrupt energy group.
If the attempts to find a global partner fail, Andersen's operations in Europe and other parts of the world could break away from the parent company, sparking what is likely to be a bitter legal battle over their liability for the legal claims facing the company in the US.
Andersen employs 400 people in the Republic, with 21 partners who are part of the worldwide firm.
Deloitte and Touche has more than 700 staff here and 36 partners, while Ernst & Young employs 550 and audits one-third of Irish-quoted companies.
Enron maintains that Andersen played a crucial role in setting up the complex financial structure that kept debt off the energy trader's balance sheet. The Department of Justice is considering criminal indictments against Andersen.
The firm has been losing prestigious audit clients, raising questions about its future viability. Yesterday FedEx, the transportation company, and Riggs National, the Washington-based bank, became the latest clients to axe Andersen as auditor.
This month, Merck, the pharmaceutical company, Delta Air Lines and Freddie Mac, the housing finance institution, have also switched auditors.
A deal with Deloitte or Ernst & Young has serious obstacles to overcome. Andersen's potential Enron liabilities are mounting, with any criminal and civil settlements, as well as lawsuits and legal fees, possibly adding up to billions of dollars.
The Department of Justice and the Securities and Exchange Commission's views on a deal have to be considered.
Regulators in the European Union and the US have in the past expressed concerns about consolidation in the profession.
Andersen, Ernst & Young and Deloitte all refused to comment.
- (Financial Times Service)
