Standard Life and Aberdeen Asset Management have reached agreement on an all-share merger with Aberdeen shareholders owning 33.3 per cent of the new entity and Standard shareholders holding 67.7 per cent.
The new entity will have two co-CEOs, with Standard Life CEO Keith Skeoch and Aberdeen CEO running the combined group. The deal values the Aberdeen business at £3.8bn.
The new brand name will combine both names, with the asset management arm likely to be called Aberdeen Standard Life Investment Management or Aberdeen Standard Life Investments, although the Standard Life brand may remain in certain areas for life insurance, such as in Asia.
The business will be based in Edinburgh. The co-CEOs have admitted there will be some job losses but have declined to comment on numbers at this stage, beyond saying rumours of 1,000 job losses are ‘grossly’ over the top.
Sir Gerry Grimstone, chairman of Standard Life, will become chairman of the board of the combined group, with Simon Troughton, chairman of Aberdeen, becoming deputy chairman.
Bill Rattray, of Aberdeen, and Rod Paris, of Standard Life, will become CFO and CIO respectively.
It is envisaged that the Board of the Combined Group will comprise equal numbers of Standard Life and Aberdeen directors.
Standard Life CEO Keith Skeoch says: “The combination of our businesses will create a formidable player in the active asset management industry globally. 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.”
Aberdeen CEO Martin Gilbert: “We believe this merger is excellent for our clients, bringing together the strong and highly complementary investment capabilities of each firm with a breadth and depth of talent unrivalled amongst UK active managers and positioning the business to meet the evolving needs of clients and customers. 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.”
Hargreaves Lansdown senior analyst Laith Khalaf says: “This merger is a marriage of the old and the new, both in terms of the companies’ heritage and their main areas of strength.
“In particular, Aberdeen’s emerging markets focus dovetails well with Standard Life’s capabilities in developed markets, though there are considerable areas of overlap between the two fund groups, particularly in multi-asset, fixed income and property strategies.
“Standard Life brings some stability to the table for Aberdeen, which has seen 15 quarters of consecutive outflows, and which will also now benefit from distribution through Standard Life’s workplace pension and wrap platform. Aberdeen meanwhile offers Standard Life a quick route to the big boy’s table by almost doubling assets under management.
“Active managers are feeling the pinch when it comes to fund charges, thanks to the gauntlet laid down by the passive price war, and by targeting £200 million of annual cost savings, both companies will go some way to relieving some of that pressure on the bottom line. However that does unfortunately spell job losses for the combined group.”