British financial services group Standard Life has agreed to buy Aberdeen Asset Management for ￡8 billion (US$9.8 billion) to create one of the world’s biggest fund managers, the pair said yesterday.
The deal was presented as a merger, but Standard Life shareholders are to have overall control with a 66.7 percent stake in the new firm, according to a joint statement.
Aberdeen is to hold the rest.
The combined business is to have a stock market capitalization of ￡1 billion and oversee assets worth ￡60 billion — making it one of the largest investment managers in the world and the biggest in Britain.
The news sent Standard Life’s share price more than 7 percent higher in early morning London trading yesterday, while Aberdeen stock gained almost 6 percent.
“The boards of Standard Life PLC and Aberdeen Asset Management PLC are pleased to announce that they have reached agreement on the terms of a recommended all-share merger,” the statement said.
The transaction “has a compelling strategic and financial rationale through combining Standard Life’s and Aberdeen’s complementary strengths to create a world class investment group,” it said, adding that the deal would “harness Standard Life’s and Aberdeen’s complementary, market leading investment and savings capabilities.”
The new business is to be headquartered in Scotland and have 9,000 staff worldwide.
“We have always been clear that it is Standard Life’s ambition to become a world-class investment company and that this would be achieved through continued investment in diversification and growth, coupled with a sharp focus on financial discipline,” Standard Life chief executive officer Keith Skeoch said. “We are therefore delighted that this announcement marks another important step towards achieving that ambition.”
“We strongly believe that we can build on the strength of the existing Standard Life business by combining with Aberdeen to create one of the largest active investment managers in the world and deliver significant value for all of our stakeholders,” he said.
The two groups, which had announced that they were in talks over the weekend, aim to complete the merger in the third quarter subject to regulatory and shareholder approvals.
“This merger brings financial strength, diversity of customer base and global reach to ensure that the enlarged business can compete effectively on the global stage,” Aberdeen chief executive officer Martin Gilbert said.
“The move by Standard Life to buy Aberdeen is a major attempt to try to build their defenses as the active management industry comes under increasing pressure from lower-cost passive managers,” Interactive Investor head of investment Rebecca O’Keeffe said.
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