Aberdeen Asset Management and Standard Life confirm merger terms

Standard Life said in a statement Saturday that the completion of a merger will be subject to shareholder approval. For Aberdeen shareholders this would work out to 0.757 new Standard Life shares per Aberdeen share now owned.

The deal comes as asset managers, which charge higher fees to make active investment decisions, face growing competition from low-priced index-tracking rivals and rising regulatory costs.

Aberdeen chief executive Martin Gilbert who, in the space of 34 years, has grown the business from a single investment trust into one worth £3.8 billion, will run the combined entity alongside Standard boss Keith Skeoch.

The board of directors of the new firm would comprise equal numbers of Standard Life and Aberdeen directors.

Among those "redundant costs" are synergies that will see duplicated activities cut, which analysts forecast will result in the loss of about 1,000 jobs, or around one in ten at the two firms, says the BBC.

Sources said this weekend that advisers to the two sides had raised the idea of either a full merger, or a tie-up between Aberdeen and Standard Life Investments, the Edinburgh-based group's asset management division.

Under the terms, Aberdeen shareholders would own a third of the new enlarged company's stock.

Sir Gerry Grimstone, Standard Life's chairman, will chair a merged group, although it is unclear how long that would be for.

A deal would boost revenue, cash flow and earnings that will deliver "attractive and sustainable returns for shareholders, including dividends", according to the statement.

Bill Rattray of Aberdeen would become chief financial officer and Rod Paris of Standard Life would serve as chief investment officer.

"Aberdeen has been overly reliant on Asian and emerging markets for a long time and this has created significant volatility in its business performance, while Standard Life will see those Asian and emerging market assets as very complementary to its fixed interest and United Kingdom asset base".

Just five months after Henderson (HGG) agreed to take over America's Janus Capital, and we said "more [deals] will follow", the pair has announced plans to create Britain's biggest fund manager, removing some of the Scottish mist swirling above both companies. The firm weighed a bid for Pioneer Global Asset Management and dropped it after saying the price was too high.

Ryan Hughes, head of fund selection at AJ Bell, said: "The proposed merger between Standard Life and Aberdeen makes strategic sense for both parties". Standard Life declined to comment on the valuation. Aberdeen's shares were 4% up. Sky News first reported the talks.

  • Eleanor Harrison