Aberdeen Asset Management and Standard Life agree all-share merger

Under the terms of the potential merger Standard Life chairman Sir Gerry Grimstone would become chairman of the boardDDP USA  REX  SHUTTERSTOCK

Both firms said a merger would create a world-class active fund management company with strengths in all asset classes and markets.

Job cuts, efficiencies of scale and being able to offer prospective investors a wider range of in-house fund options is just what both companies need to compete against American giants like Blackrock in this new cut-throat environment.

Under the terms, which remain the same since talks were first revealed on March 4, Standard Life shareholders will own 66.7 percent of the combined group, according to a joint statement from on Monday.

Shares in Standard Life rose 7% in morning trading, while Aberdeen was up 5.3% on news of the merger.

The companies said the deal was still subject to a number of conditions, including shareholder approvals, but recommended that investors vote the deal through. Laith Khalaf, senior analyst at Hargreaves Lansdown, said the main places of overlap are in multi-asset, bonds and property.

"Aberdeen meanwhile offers Standard Life a quick route to the big boy's table by nearly doubling assets under management".

There also looks to be a strong whiff of Brexit about the deal, given that the EU exit is expected to raise costs and make European clients harder to reach.




McDermott said: "We could well see more merger and acquisition in the sector but with more than 100 fund management companies in the United Kingdom, there is room for it without impacting consumer choice".

While cost-cutting after the merger threatens the loss of valuable financial sector jobs at a hard time for the Scottish economy, many in Scotland had already been concerned about the future of Aberdeen which fell out of the FTSE 100 past year.

"There will be a political dimension to the creation of a Scottish national champion, not least because the bulk of any cost savings will come North of the border".

But there are no guarantees. This will make the group the largest active investment manager in the United Kingdom and the second-largest in Europe.

Similarly, the pair could not say where investment rationalisation would take place.

"Underperformance of Aberdeen's Global and APAC equity strategies remains a concern, and we continue to see an increasingly competitive environment for active managers, including in the EM space, with more passive strategy alternatives now available to investors". "We were both medium-sized asset managers".

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