Accountancy giants to merge firms

Price Waterhouse and Coopers & Lybrand are merging operations worldwide, creating the biggest accountancy firm in Ireland with an estimated combined fee income last year of more than £60 million and almost 1,200 staff. The merger is subject to the approval of the 45 Price Waterhouse (PW) and 35 Coopers & Lybrand (C&L) partners in Ireland.

The merger will displace KPMG from the number one position in the accountancy business in Ireland. Ernst & Young, Deloitte & Touche fill the next three position as the "Big Six" becomes a "Big Five" when the merger process is complete.

The two managing partners, Mr Donal O'Connor of Price Waterhouse and Mr Bill Cunningham of Coopers & Lybrand, were reluctant to detail the most recent fee income figures, but Finance magazine estimated that in 1996, Price Waterhouse had fee income of £32.6 million and Coopers & Lybrand, £23.7 million. Accounting sources believe the industry grew fee income by between 8 and 12 per cent last year. This suggests that the combined PW/C&L had fee income of well over £60 million. The two managing partners were also reluctant to comment on who would head up the merged firm. "Things like that will be decided down the road," said Mr O'Connor, as also will the decisions on where the head office will be located and who will head up the various departments within the merged company. Price Waterhouse currently operates out of extensive offices in Wilton Place, while Coopers & Lybrand moved to custom-built offices in George's Quay earlier this year.

Mr Cunningham said: "We're both strong and wide-based practices but the merger will give us the opportunity to look at other areas that we haven't been able to look at as we are."

Mr O'Connor added that the merger was likely to result in more, rather than fewer, people in the merged group. "Both firms are doing very well; we would see numbers increasing," he said. Price Waterhouse has 635 employees and Coopers & Lybrand has 550.

The worldwide merger of the two groups was approved yesterday by the two global boards. The merger would create the world's largest professional services group, with 135,000 staff, 8,500 partners and annual revenues in excess of $13 billion (£8.6 billion). It would knock the Andersen organisation into second place internationally.

The plan is likely to come under regulatory scrutiny in the US, Europe and Tokyo and must be approved by partners in each country. The news prompted speculation of further consolidation, with some forecasting there could be a "Big Three" by 2000.

Few hard details of the proposal were given as partners around the world received the news by e-mail.

If the merger goes ahead, Mr Nick Moore, chairman of Coopers & Lybrand International, will be chairman of the new international firm. He said the plan was designed to provide the rapidly expanding market for "seamless" global services. Mr Jim Schiro, chief executive of Price Waterhouse, is the prospective chief executive.

In the US, the two firms hold between 3035 per cent of audit appointments to Fortune 500 companies. In Britain, the new merged firm would hold 50 per cent of the audit market among the FTSE-100 companies.

(additional reporting: Financial Times Service)