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Standard Life Eyes Aberdeen to Create $811 Billion Manager
by Sarah Jones
March 4, 2017, 6:29 PM GMT March 5, 2017, 11:04 AM GMT
- Deal would create one of Europe’s largest asset managers
- Combination could achieve annual cost savings of $246m: Sky
Standard Life Plc, Scotland’s largest insurer, is in talks to acquire Aberdeen Asset Management Plc, creating one of Europe’s biggest fund managers overseeing 660 billion pounds ($811 billion).
Under the terms of the potential deal, Standard Life shareholders would own 66.7 percent of the combined group, according to a joint statement on Saturday. Aberdeen’s investors would receive 0.757 new Standard Life ordinary share for each share they already own. That values Aberdeen in line with Friday’s market value of 3.77 billion pounds, according to Bloomberg calculations.
Active managers have been working to halt a tide of investors shifting money to low-cost, passive funds and have been cutting costs to protect profitability. Aberdeen, hurt by weaker sentiment toward emerging markets, has had more than three years of redemptions, leading Chief Executive Officer Martin Gilbert to reduce expenses and freeze salaries.
“Aberdeen has been struggling of late,” said Laith Khalaf, a senior analyst at Hargreaves Lansdown Plc. “They have seen a huge number of outflows for a significant period of time so probably a combination with Standard Life will steady that ship somewhat.”
Standard Life is known for its multi-asset strategies, including its flagship GARS fund that manages about 25.1 billion pounds, while Aberdeen is seen as an emerging-market specialist, with about a quarter of its assets invested in the region. Both companies have suffered outflows from those strategies.
Both Gilbert and Standard Life’s CEO Keith Skeoch have said they wanted to grow in the U.S., where most of the world’s assets are managed, as part of efforts to become more global. Standard Life Investments, which has a partnership with John Hancock, currently sells nine products to U.S. investors and oversees about 12.5 billion pounds of assets there.
The potential combination between the two Scottish firms could achieve annual cost savings of 200 million pounds, Sky News reported, without saying where it got the information. Standard Life, based in Edinburgh, employs around 8,335 people and the Aberdeen, Scotland-based asset manager has more than 2,800 workers.
Talks are ongoing and “the potential merger represents an excellent opportunity to leverage Standard Life and Aberdeen’s combined strengths,” according to the firms. The combined company would have a market value of about 11 billion pounds and see Skeoch and Gilbert become co-CEOs and Standard Life’s Gerry Grimstone would become chairman.
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https://www.bloomberg.com/news/artic...l-share-merger
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