Standard Life and Aberdeen Asset Management confirm merger talks

Scottish investment giants Standard Life and Aberdeen Asset Management confirmed last night that they are in talks over a merger.

By The Newsroom
Saturday, 4th March 2017, 7:51 pm
Updated Friday, 24th March 2017, 10:53 am
Standard Life shareholders would own 66.7 per cent of the combined group, if a merger takes place. Pic Neil Hanna
Standard Life shareholders would own 66.7 per cent of the combined group, if a merger takes place. Pic Neil Hanna

Under the terms of the proposed arrangement, Aberdeen shareholders would own 33.3 per cent and Standard Life shareholders would own 66.7 per cent of the combined group.

If the merger takes place, the combined group would manage funds worth £600 billion.

Standard Life plc has a stock market value of over £7 billion and Aberdeen Asset Management just over £3.5 billion. Between them, they employ around 9000 people.

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The companies issued a statement shortly after 6pm on Saturday after press speculation had suggested a merger was being discussed.

Sir Gerry Grimstone, chairman of Edinburgh-based Standard Life, would become chairman of the board of the Combined Group, with Aberdeen’s chairman Simon Troughton becoming deputy chairman.

Keith Skeoch, CEO of Standard Life and Martin Gilbert, CEO of Aberdeen Asset Management who founded the company in 1983, would become co-CEOs of the combined group. In addition, Bill Rattray of Aberdeen Asset Management and Rod Paris of Standard Life would become CFO and CIO respectively.

It is envisaged that the board of directors of the combined group would comprise equal numbers of Standard Life and Aberdeen Asset Management directors.

The statement said: “The potential merger represents an excellent opportunity to leverage Standard Life and Aberdeen’s combined strengths to create a world class investment company.

The statement continued: “It is expected that the Potential Merger would:

“Harness Standard Life and Aberdeen’s complementary, market leading investment and savings capabilities which would deliver a compelling and comprehensive product offering for clients covering developed and emerging market equities and fixed income, multi-asset, real estate and alternatives;

“Establish one of the largest and most sophisticated investment solutions offerings globally, positioning the Combined Group to meet the evolving needs of clients;

“Reinforce both Standard Life and Aberdeen’s long-standing commitment to active management, underpinned by fundamental research, with both global reach and local depth of resources;

“Create an investment group with strong brands, leading institutional and wholesale distribution franchises, market leading platforms and access to long-standing, strategic partnerships globally;

“Bring scale, as one of the largest active investment managers globally with GBP660bn of proforma assets under administration and financial strength, transforming the Combined Group’s ability to invest for growth, innovate and drive greater operational efficiency;

“Deliver through increased diversification an enhanced revenue, cash flow and earnings profile and strong balance sheet that is expected to be capable of generating attractive and sustainable returns for shareholders, including dividends;

“Result in material earnings accretion for both sets of shareholders, reflecting the significant synergy potential of a combination.”

Under the terms of the Takeover Code, Standard Life must either announce a firm intention to make an offer for Aberdeen Asset Management, or announce that it does not intend to make an offer, no later than 5pm on 1 April 2017.