UK accountancy firm BDO to merge with rival PKF's UK arm

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

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

The UK operations of PKF would be separated from its  international operations and incorporated into BDO. It would become a member of BDO International, the biggest mid-market international network having revenues in excess of $5.7 billion and operations across135 countries.

In the UK, BDO had a turnover of £280 million in the year to July 2011, while PKF reported revenues of £103 million in the year to April.

However, the merged entity would have to lift turnover by some £1 billion to match the business levels of Britain's big four – KPMG, Deloitte, PricewaterhouseCoopers and Ernst & Young – which together audit 99 of the FTSE 100 companies.

According to the firms it was too early to say what the impact would be on staff and offices, but stressed they had a "commitment to growth".