Andersen partners and staff approved the deal Tuesday.

John Connolly will remain Chief Executive and Senior Partner of the enlarged firm. A number of Andersen partners will join the Board and Executive team.

"This is a very exciting transaction for Deloitte and our people. Clients will particularly benefit from our enhanced capabilities to advise in areas such as Tax, Corporate Finance and Human Capital. Both firms have outstanding professionals and the enlarged firm will offer even greater development opportunities for all of our people," said Connolly.

The merger undercuts KPMG's efforts to pick up a large chunk of Andersen units throughout the world. KPMG has been repeatedly shut out by Deloitte, which has already taken Spain, Latin America, Portugal and tax partners from Andersen's U.S. practice. PricewaterhouseCoopers and Ernst & Young have also picked up some Andersen units, as well.

Arthur Andersen said last week it has tentatively agreed to transfer much of its U.S. tax practice to Deloitte & Touche LLP in what would be the first major step in its effort to shed non-audit businesses.

Though KPMG has yet to shake on a deal, it is expected to soon pick up offices throughout Eastern Europe.

Once regulatory approval is given to the merger, Deloitte will be the second largest accounting firm in the UK.

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