Aberdeen, Standard Life Agree On $4.7B Merger

Mar 6 2017 | 9:38pm ET

British financial services giants Standard Life and Aberdeen Asset Management have agreed to a $4.7 billion all-stock merger that will create one of the world’s largest active asset managers at a time when active fund management is under increasing competition from passive index-driven management and roboadvisors.

Under the terms of the proposed transaction, Aberdeen shareholders will exchange their shares for 0.757 shares of stock in Standard Life, which will own around 66.7% of the resulting company. CEO duties are to be split between Martin Gilbert, CEO of Aberdeen, and Kieth Skeoch, Standard Life’s chief executive – a set up viewed skeptically by some given the poor track record of similar post-merger power-sharing arrangements. 

Under the terms of the deal, Aberdeen shareholders will be entitled to receive 0.757 new shares in exchange for each Aberdeen share they own. Aberdeen shareholders will own about 33.3% of the merged company, according to a joint statement, and Standard Life shareholders the remaining 66.7%. The deal values Aberdeen’s existing ordinary share capital at around £3.8 billion. 

News that the two companies were in discussions surfaced over the weekend and they announced an agreement on Monday at will result in a single Scotland-based company reflecting both names in a new brand. 

The transaction, which is subject to customary legal, shareholder and regulatory approvals, is expected to be accretive to both sets of shareholders, the statement said, due to “significant synergy potential of the merger,” and save approximately £200 million annually within three years. It is expected to close in the third quarter of 2017.

Gilbert founded Aberdeen with a group of co-investors in 1983. It has since grown to a global asset manager with expertise in emerging markets and some £303 billion in AUM as of the end of 2016. Aberdeen’s alternatives platform encompasses multi-manager research, selection and portfolio management for hedge fund strategies, private debt and credit strategies, real asset investments and direct investments in infrastructure projects.

Standard Life's investments unit, meanwhile, was launched in 1998 as a wholly-owned subsidiary of Britain’s Standard Life Plc, which itself was begun as a life insurance company in Edinburgh in 1825. It has £278 billion in assets under management and £357 billion in assets under administration. 

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