The boards of Standard Life and Aberdeen Asset Management have reached an agreement under the terms of a £11bn all-share merger.
The combined group, which will be headquartered in Scotland and further manage £660bn of assets, will be branded to incorporate the names of both Standard Life and Aberdeen, the companies stated in a joint press release.
Following completion of the merger, Aberdeen shareholders would own approximately 33.3% and Standard Life shareholders would own approximately 66.7% of the new entity on a diluted basis.
The merger aims to harness Standard Life’s and Aberdeen’s complementary, market investment and savings capabilities with a product range covering developed and emerging market equities and fixed income, multi-asset, real estate and alternatives.
It is also set to bolster both Standard Life’s and Aberdeen’s commitment to active management, underpinned by fundamental research, with both global reach and local depth of resources.
The companies said the merger will result in an investment group with strong brands, institutional and wholesale distribution franchises, market platforms and access to long-standing, strategic partnerships globally.
Once the merger complete, 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.
Keith Skeoch, CEO of Standard Life, and Martin Gilbert, CEO of Aberdeen, will become co-CEOs of the newly formed entity, while Bill Rattray, of Aberdeen, and Rod Paris, of Standard Life, will become CFO and CIO respectively.
The firms study the option of a board comprising equal numbers of Standard Life and Aberdeen directors.
In details, 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 378.5p per Standard Life share on 3 March 2017, the merger values each Aberdeen share at 286.5p and Aberdeen’s existing issued ordinary share capital at around £3.8bn.
Under the terms of the merger, Standard Life and Aberdeen have agreed that Standard Life shareholders will be entitled to receive the proposed final dividend of 13.35p per Standard Life
share for the six month period ended 31 December 2016, scheduled to be paid on 23 May 2017.
Aberdeen shareholders will be entitled to receive an interim dividend of up to 7.5p for the six month period ended 31 March 2017, scheduled to be paid in June 2017.
Standard Life will seek the approval of the Standard Life shareholders for the merger at the Standard Life general meeting.
The merger will also be conditional on the approval of the Standard Life shareholders of the issuance of the new shares at the Standard Life general meeting.
Commenting on the merger, Keith Skeoch, CEO of Standard Life said: “We have always been clear that it is Standard Life’s ambition to become a world-class investment company and that this would be achieved through continued investment in diversification and growth, coupled with a sharp focus on financial discipline.
“We are therefore delighted that this announcement marks another important step towards achieving that ambition. The combination of our businesses will create a formidable player in the active asset management industry globally. 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.”
Martin Gilbert, CEO of Aberdeen added: “We believe this merger is excellent for our clients, bringing together the strong and highly complementary investment capabilities of each firm with a breadth and depth of talent unrivalled amongst UK active managers and positioning the business to meet the evolving needs of clients and customers.
“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.”