Andersen, KPMG End Merger Talks on Non-U.S. Operations

Arthur Andersen

, the accounting firm that is struggling to stay afloat in the wake of the

Enron

collapse, and rival outfit

KPMG

have ended discussions on merging their non-U.S. operations.

According to a published report, Andersen will now try to reach a deal for its international businesses with

Ernst & Young

. Partners in several countries have already voted to split from Andersen and link up other firms, and in the latest development, Andersen Spain has agreed to join

Deloitte & Touche

.

Another report indicated that Andersen and KPMG are still discussing an arrangement in which Andersen partners in some countries would be absorbed by KPMG. The firms said in mid-March that they had a verbal agreement to join their non-U.S. businesses, but Tuesday's reports signal that a merger spanning all international operations is no longer an option.

The future of Andersen, which is

under an indictment for obstruction of justice, has been uncertain since the firm saw its reputation sullied by its relationship with Enron. Last December, energy trader Enron filed for bankruptcy after numerous questions about the company's accounting were raised. Andersen audited Enron's books. Last week, the company's CEO, Joseph Berardino,

resigned from his post.