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Reuters
LONDON
Standard Life and Aberdeen Asset Management, two of Scotland's most well-known financial firms, are in talks over an 11 billion pound ($13.5 billion) tie-up to create Britain's largest investment manager.
Fund management companies across the globe have been burdened with rising regulatory costs and pressure to lower fees in the face of weak average returns and growing competition from cheaper, index-tracking rivals, driving consolidation among smaller and mid-sized managers.
Standard Life is roughly twice the size of Aberdeen at 7.5 billion pounds and historically famous for selling insurance, tracing its roots back to the 19th century, while Aberdeen is one of Europe's largest listed fund firms. In recent years Standard Life has built up its Standard Life Investments asset management arm.
SLI and Aberdeen now manage broadly similar amounts across stocks, bonds and other assets, and together they would manage assets of about 660 billion pounds for a range of retail and institutional clients. That is more than double those of Henderson Group and Janus Capital Group, which last year agreed their own $6 billion all-share merger, as well as Schroders, currently Britain's biggest listed asset manager with nearly 400 billion pounds in assets.
The firms, which both have a large presence in Edinburgh as well as offices and sales teams across the world, said without elaborating that they saw"significant synergy potential", raising the prospect of job losses among their nearly 10,000 workers.
Under the terms of the proposed deal, Aberdeen shareholders would own 33.3 percent of the combined group under the terms of the potential merger, with Standard Life shareholders owning the other 66.7 percent, the companies said.
Aberdeen shareholders would receive 0.757 of a new Standard Life ordinary share for each Aberdeen ordinary share. Other terms of the proposed deal were still being discussed, they said, suggesting much work still needs to be done before any formal offer can be made to both firms and their shareholders.
Standard Life Chairman Gerry Grimstone would become chairman of the board of the combined group, with Aberdeen Chairman Simon Troughton becoming deputy chairman of a board that would have equal numbers of directors from both companies.
Keith Skeoch, chief executive of Standard Life, and Martin Gilbert, his counterpart at Aberdeen, would share the CEO's role at the new company, while Bill Rattray would become chief financial officer.
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06/03/2017
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