Standard Life and Aberdeen Asset Management are to merge, creating one the largest global investment companies, looking after assets of around £660 billion and employing some 9,000 people.
As predicted in the media over the weekend, the Boards of both companies have agreed to an all-share merger. Holders of Aberdeen Shares will be entitled to receive 0.757 new shares in exchange for each Aberdeen Share.
Based on this exchange ratio and the closing price of 378.5 pence per Standard Life Share on 3 March 2017, the merger values each Aberdeen share at 286.5 pence and Aberdeen’s existing issued ordinary share capital at approximately £3.8 billion. Standard Life is valued at £7.5 billion.
Following completion of the merger, Aberdeen shareholders would own approximately 33.3% and Standard Life shareholders would own approximately 66.7% of the combined group on a diluted basis.
As outlined in our earlier story, the rationale for the merger was detailed in a statement:
- “harness Standard Life’s and Aberdeen’s complementary, market leading investment and savings capabilities which would deliver a compelling and comprehensive product offering for clients covering developed and emerging market equities and fixed income, multi-asset, real estate and alternatives;
- reinforce both Standard Life’s and Aberdeen’s long-standing commitment to active management, underpinned by fundamental research, with both global reach and local depth of resources;
- establish one of the largest and most sophisticated investment solutions offerings globally, positioning the Combined Group to meet the evolving needs of clients;
- create an investment group with strong brands, leading institutional and wholesale distribution franchises, market leading platforms and access to long-standing, strategic partnerships globally;
- bring scale, as one of the largest active investment managers globally with £660 billion of pro forma assets under administration and financial strength, transforming the Combined Group’s ability to invest for growth, innovate and drive greater operational efficiency;
- deliver through increased diversification an enhanced revenue, cash flow and earnings profile and strong balance sheet that is expected to be capable of generating attractive and sustainable returns for shareholders, including dividends;
- result in material earnings accretion for both sets of shareholders, reflecting the significant synergy potential of the Merger.”
Once the merger goes ahead, it’s subject to approval from shareholders and regulators, Sir Gerry Grimstone, Chairman of Standard Life, will become Chairman of the Board of the Combined Group, with Simon Troughton, Chairman of Aberdeen, becoming Deputy Chairman. And Keith Skeoch, CEO of Standard Life, and Martin Gilbert (pictured above) CEO of Aberdeen, will become co-CEOs of the new group.
The group will operate under new branding drawn from both the Standard Life Group and the Aberdeen Group.