Friday 19 / April / 2024
London: 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 per cent 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 of the asset manager’s ordinary shares. That values Aberdeen in line with Friday’s market value of 3.77 billion pounds, according to Bloomberg calculations.
Active managers have been trying to stop a tide of investors shifting money to low-cost, passive funds and have been cutting costs to maintain or boost 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 for higher-paid workers.
“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.”
The combination could achieve annual cost savings of 200 million pounds, Sky News reported earlier. Standard Life had 8,335 employees at the end of year and the Aberdeen, Scotland-based asset manager had more than 2,800 workers in September.
Talks are ongoing and “the potential merger represents an excellent opportunity to leverage Standard Life and Aberdeen’s combined strengths,” said the firms, which would have a market value of about 11 billion pounds. Standard Life Chief Executive Officer Keith Skeoch and Aberdeen’s Martin Gilbert would become co-CEOs if the deal is completed. Standard Life Chairman Gerry Grimstone would become chairman of the board.
Sustainable returns
A deal would boost revenue, cash flow and earnings that will deliver “attractive and sustainable returns for shareholders, including dividends,” according to the statement. Both Aberdeen and Standard Life’s investment unit reported outflows in 2016 after investors pulled money in the aftermath of Britain’s shock decision to leave the European Union and after Donald Trump’s presidential election victory. Aberdeen’s shares have risen 11.3 per cent this year and Standard Life is up 1.8 per cent.
Gilbert has previously said he would like to expand in the US and do a deal similar to Henderson Group Plc’s cross-border merger with Janus Capital Group Inc. The firm weighed a bid for Pioneer Global Asset Management and dropped it after saying the price was too high.
Based on Standard Life’s closing share price on Friday of 378.50 pence, the deal would offer Aberdeen shareholders about 286.52 apiece, for a total value of about 3.78 billion pounds based on Aberdeen’s 1.32 billion shares outstanding. Standard Life declined to comment on the valuation. The insurer, which has sold off insurance assets to focus on asset management, has a market value of 7.5 billion pounds.
Goldman Sachs Group Inc. is advising Standard Life, while Credit Suisse Group AG and JPMorgan Chase & Co. are advising Aberdeen.
