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Thread: Standard Life Eyes Aberdeen to Create £660 Billion Manager

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    Default Standard Life Eyes Aberdeen to Create £660 Billion Manager

    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.

    more....
    https://www.bloomberg.com/news/artic...l-share-merger

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    Scottish politicians welcome Aberdeen-Standard Life deal
    https://www.ft.com/content/f2f615c2-...0-1ce02ef0def9
    MPs say merger has benefits but there are concerns over threat of job losses



    Oil support vessels in Aberdeen harbour. The sector has suffered from oil price weakness © Getty

    Politicians in Scotland have welcomed Standard Life’s £3.8bn takeover of Aberdeen Asset Management, a deal that unites two of the biggest names in Scottish finance.

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

    “The deal clearly has implications for jobs in the short term and medium term, but you have to look at the long-term prospects,” said George Kerevan, a Scottish National party MP and Treasury committee member.

    “I would personally rather see a Scottish solution than lose another company to foreign ownership,” Mr Kerevan said.

    Murdo Fraser, Scottish Conservative shadow finance secretary, said there could be far-reaching benefits from the takeover.

    “This is potentially a very exciting opportunity to create a large, Scottish-headquartered, world-leading finance house,” Mr Fraser said.

    “That said, there will be concerns about job losses from a merger and staff need to be told exactly what this would mean for them.”

    Martin Gilbert, the 62-year-old chief executive and founder of Aberdeen, is a friend of former Scottish first minister Alex Salmond and the fund house is a substantial sponsor of sporting events such as golf’s Scottish Open.

    But Aberdeen has suffered 15 consecutive quarters of net fund outflows amid growing doubts about its relatively high exposure to emerging markets. Both Aberdeen and Standard Life have also been hit by the rise of passive funds that track an index and are much cheaper than their actively managed portfolios.

    Mr Gilbert told BBC Radio Four there would be “some job losses” from the deal but that an estimate of 1,000 redundancies was “way, way exaggerated”.

    Mr Salmond, who is now an SNP Aberdeenshire MP, said he had spoken with Mr Gilbert and was “greatly reassured” about the outlook for jobs in Aberdeen.

    The Scottish government said it would be making urgent contact with both companies to clarify the impact on jobs at what would be an “an anxious time” for employees, but also noted that the deal could be an opportunity for the Scottish financial sector.

    “The financial services sector and firms like Aberdeen Asset Management and Standard Life are vitally important to Scotland’s economy,” a Scottish government spokesperson said.

    “The proposed merger may provide an opportunity to build on the expertise and skills of both companies and strengthen Scotland’s reputation for fund and asset management,” the spokesperson added.

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