EY and KPMG have signed a merger agreement in Denmark, with the newly merged firm looking to operate under the EY name. The deal is still subject to regulatory approval, which is likely to take months.
"This agreement draws on the complementary strengths of EY and KPMG Denmark," EY Nordics regional managing partner Erik Mamelund said. "Until regulatory approval is obtained it would be premature to say anything further."
Prior to the merger EY Denmark was ranked as the fifth-largest firm in the country and the merger will more than double its size, probably making it the second-largest.
EY Denmark last reported fee income of DKK615m ($111.8m), while KPMG, ranked as the third-largest firm, earned DKK1,546m in fees.
KPMG global chairman Michael Andrew commented on the move in a statement: "I can confirm that our Danish member firm has decided to leave the KPMG network. We believe a number of non-equity partners and staff will make a positive choice to remain with KPMG. We remain committed to having a strong, effective and focused firm in Denmark that can serve local and global clients and provide the market with the choice of at least four large professional service firms."
KPMG is yet to announce a replacement firm and with BDO ranked as the fourth-largest firm in Denmark with revenues of DKK800m it’s likely the firm might be given an offer to move to KPMG.
BDO chief executive Martin van Roekel told the International Accounting Bulletin that it’s an uncertain time, especially as with this deal "we are seeing one Big Four firm taking on another, which has not happened in the past few years".
"We do realise, in a situation like this, one of the possible candidates to take over the membership of a Big Four network without a member would be our firm, but we are confident that BDO firms are happy with BDO membership, but I wouldn’t be surprised if our firm was contacted in this situation.
The Danish market has been known as fiercely competitive, with PwC merging with Grant Thornton Denmark in 2011, followed by Grant Thornton adding PKF Kresten Foged as its member. Also in 2011 Baker Tilly Denmark acquired KPMG Randers, which was one of KPMG’s operations in the country.