"We decided to go with Deloitte after the global deal with KPMG collapsed and we felt KPMG's offer was less attractive than others," explained Sung Sik Ahn, a marketing official at Andersen in Seoul. Ahn said Andersen's South Korean partners signed a memorandum of understanding Monday with Deloitte & Touche to merge the two companies.

South Korea's Andersen office was to merge with KPMG International's Korean partnership, but that deal fell apart a few weeks ago, Ahn said. A KPMG spokesman declined to comment.

Andersen Worldwide and KPMG International decided April 2 to drop plans to merge their non-U.S. offices after defections from several Andersen members, which decided to merge with other accounting firms.

But Seung Woo Yang, managing partner of Andersen's Seoul office, had said his company would go ahead with the KPMG tie-up despite the collapse of the global deal. The Korean offices of Andersen and KPMG had started due diligence and were hoping to complete the merger by Oct. 1.

Ahn, however, said offers from Deloitte & Touche and Ernst & Young llp proved to be more attractive, and Andersen eventually decided to go with Deloitte. A final deal is expected by July 1. No financial advisers were hired by either company.

Jae Youl Kim, a spokesman for Deloitte, said his company was interested in a tie-up with the Korean Andersen office as soon as it was known that Andersen offices were looking to merge with other accounting firms.

"We really wanted to become their partner," Kim said.

Andersen members have decided to merge with Deloitte in Taiwan, Britain, Italy and other countries, while Andersen offices in Germany, France and elsewhere have decided to go with Ernst & Young.

A merger of Andersen and Deloitte would create South Korea's second-largest accounting firm, with a combined staff of 1,100. PricewaterhouseCoopers, with 2,000 employees, is the biggest accounting firm in the country.

The local name for Andersen is Anjin & Co. while Deloitte's Korean member is Hana Accounting Corp. Samil is the local name for PricewaterhouseCoopers and Samjong represents KPMG.

Ahn said the merged firm's English name would be Deloitte & Touche but the Korean name has not been determined.