Merger seeks scale to take on 'big four'

The accountancy firm BDO, the sixth-biggest in Britain, is to merge with the UK arm of rival PKF, the ninth-biggest, to create a business with 3,500 staff and £400m in revenues that will aim to challenge the "big four" auditors.

The two accountancy firms said they were in "advanced discussions" about a merger that was on target to complete in the first few months of next year.

PKF's UK operations will be separated from its international operations and incorporated into BDO as well as being a member of BDO International, the biggest mid-market international network with revenues of more than $5.7bn (£3.5bn) and operations in 135 countries.

BDO in the UK had a turnover of £280m in the year to July 2011, while PKF reported revenues of £103m in the year to April. Still, the merged entity would have to lift turnover by some £1bn to hit the business levels of Britain's big four – KPMG, Deloitte, PricewaterhouseCoopers and Ernst & Young – which together audit 99 of the FTSE 100 companies.