Peat, Marwick is discussing a merger with KMG.

A combination of Peat, Marwick, Mitchell & Co. and KMG Main Hurdman would result in the largest worldwide accounting firm, displacing Arthur Andersen & Co. KMG Chairman John M. Thompson said his firm has been contacted by a number of firms concerning a merger but denied that his firm is currently in formal merger talks. Peat, Marwick officials also denied reports about the formal merger talks. KMG, which ranks as the ninth-largest accounting firm, held talks last September with Peat, Marwick, but they were broken off.