Scotland’s Standard Life to Buy Aberdeen Asset Management for $4.7B

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Standard Life Plc, Scotland’s largest insurer, agreed to acquire Aberdeen Asset Management Plc for about 3.8 billion pounds ($4.7 billion), creating one of Europe’s biggest fund managers.

Under the terms, which remain the same since talks were first revealed on March 4, Standard Life shareholders will own 66.7 percent of the combined group, according to a joint statement from on Monday. Aberdeen’s investors will receive 0.757 new Standard Life ordinary share for each share they already own. That values Aberdeen in line with its market value before the talks were first announced.

“We strongly believe that we can build on the strength of the existing Standard Life business by combining with Aberdeen to create one of the largest active investment managers in the world and deliver significant value for all of our stakeholders,” Keith Skeoch, chief executive officer of Standard Life, said in the statement.

The deal, which will create a 660 billion-pound asset manager, is the latest defensive move by the active management industry to combat a tide of investors shifting money to low-cost, passive funds. Aberdeen, hurt by weaker sentiment toward emerging markets, has suffered from more than three years of redemptions, leading Chief Executive Officer Martin Gilbert to cut costs to protect profitability and freeze salaries.

Standard Life’s Skeoch and Gilbert will be co-CEOs of the merged companies, which will be headquartered in Scotland. Standard Life’s Gerry Grimstone will be chairman. Standard Life, based in Edinburgh, employs around 8,335 people and the Aberdeen, Scotland-based asset manager has more than 2,800 workers.

The companies said the all-share merger reinforced the firm’s commitment to active management and would result in “material earnings accretion for both sets of shareholders, reflecting the significant synergy potential of the merger,” according to the statement.

Mitsubishi UFJ Financial Group Inc., Aberdeen’s largest shareholder with a 17 percent stake, and Lloyds Banking Group Plc, the third-biggest shareholder, support the deal, the statement says.

“We believe this merger is excellent for our clients, bringing together the strong and highly complementary investment capabilities of each firm,” Gilbert said in the statement. “This merger brings financial strength, diversity of customer base and global reach to ensure that the enlarged business can compete effectively on the global stage.”