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2 more accounting giants to merge, become largest

And now, the Big Six are becoming four.

Accounting giants Ernst & Young LLP and KPMG Peat Marwick LLP said Monday they will merge, creating the nation's largest accounting firm with about $18.3 billion in annual revenues.Terms of the deal were not disclosed.

Just last month, fellow Big Six companies Coopers & Lybrand and Price Waterhouse agreed to merge. That combined company will have $13 billion in annual revenues, which placed it temporarily on top of the list.

The moves are a reflection of the changing focus of the industry into a one-stop service that combines the traditional auditing and accounting or companies with consulting.

Ernst & Young chairman Philip Laskawy will become chairman of the combined firm until he retires in the year 2000. KPMG's chairman Stephen G. Butler will serve as chief executive and will succeed Laskawy as chairman until 2002. At that time, Butler will retire and Ernst & Young's deputy chairman William L. Kimsey will replace Butler as chief executive.

The firms had combined fiscal 1997 U.S. revenues of more than $7.5 billion and 47,500 employees.

The firms have 12,800 partners, who earn a share of the company's profits. Those partners must approve the deal, and it must receive regulatory approval from the U.S. Justice Department and European antitrust regulators.