Standard Life and Aberdeen Asset Management have agreed
terms for an all-share merger.
The proposed deal, recommended by both boards, would create
a group with £660bn in assets and the largest UK asset
manager overtaking Schroders at £386bn.
It comes after more than three years of redemptions from
Aberdeen's funds due to weaker sentiment toward emerging
Standard Life’s investment unit also had
outflows last year.
Keith Baird, financial services analyst at Cantor
Fitzgerald, sees the merger as a defensive and cost driven deal
given the threat from passive investing, pricing and
"Standard Life has had success in growing its institutional
business but has problems with GARS and mature insurance
"Aberdeen has a large emerging markets business which
"The fit between the two businesses looks reasonably
complementary but there will be a risk of revenue and staff
attrition to offset savings on costs."
Justin Bates, analyst at broker Liberum, added that Aberdeen
AM has been reviewing options for "some time".
"While it has endured over four years of net outflows
(£100.1bn), it remains a major player. We do not rule out
interest from elsewhere.
"Brand and scale are all important," Bates added. "If this
merger is successful, we would see it as a spring board, from a
position of enhanced strength, to embark on further deals,
Standard Life has a market value of £7.48bn and
Aberdeen £3.77bn, with £11.3bn
Both firms said the deal is subject to a number of
conditions, including shareholder approval.
The combined group will be named to incorporate the names of
both Standard Life and Aberdeen.
Following completion, Aberdeen shareholders will own about a
third of the company, with Standard Life shareholders owning