Aberdeen Asset Management and Standard Life confirm merger terms

It has been haemorrhaging funds over poor investment returns.

By buying its Edinburgh rival, 192-year old Standard Life is also taking the next “step in [its] evolution from a traditional insurer into an investment powerhouse”, the paper adds. No industry can survive this kind on disruption without consolidation.

Aberdeen has seen funds under management decline amid deteriorating investor sentiment towards emerging markets, the company’s stronghold.

It would also involve a merger of two of Scotland’s most important companies, attracting close scrutiny from politicians amid intensifying calls from nationalists for a second independence referendum.

The companies said the deal was subject to a number of conditions, including shareholder approval.

Standard Life and Aberdeen Asset Management have unveiled more details of their planned merger, sending shares in both groups up at the open.

It is expected both Standard Life and Aberdeen names will remain in place following the merger. That values Aberdeen in line with Friday’s market value of 3.77 billion pounds, according to Bloomberg calculations.

“Aberdeen has been struggling of late”, said Laith Khalaf, a senior analyst at Hargreaves Lansdown Plc.

“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”, he said. Standard Life’s CEO Keith Skeoch and Aberdeen’s Martin Gilbert would become co-chiefs.

The tie-up with Standard Life comes less than four years after Aberdeen merged with Scottish Widows Investment Partnership.

Investment company Standard Life and fund manager Aberdeen Asset Management just agreed to merge and become the largest asset manager in Britain.

“The deal will create one of the largest active asset managers globally”, and save more than $240 million a year by closing duplicate trading desks and combining back offices, travel and other expenses, investment-company analyst Gurit S. Kambo told clients at European brokerage JPMorgan Cazenove in a report.

“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.

Standard Life has 357 billion pounds of assets under administration, including 278 billion pounds that are actively managed.