For $4.6B, One British Giant Buys Another
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Monday, March 06, 2017

For $4.6B, One British Giant Buys Another

One British asset management titan is buying another, for 3.8 billion pounds ($4.6 billion) in stock. The acquiree has a U.S. mutual fund business, while the acquirer is a pure institutional asset manager on this side of the pond. Both are decidedly active asset managers, not passive ones.

Keith Skeoch
Standard Life
Chief Executive Officer
This morning Edinburgh, Scotland-based insurer Standard Life and Aberdeen, Scotland-based Aberdeen Asset Management [profile] confirmed plans for Standard to buy Aberdeen. [See the terms of the deal here.] The combined firm will reportedly be the biggest asset manager in the United Kingdom and second biggest in Europe, with 660 billion pounds ($810 billion) in AUM. The deal is expected to closed in Q3 2017.

J.P. Morgan and Credit Suisse advised Aberdeen on the deal, and Goldman Sachs advised Standard Life.

34-year-old Aberdeen has 302.7 billion pounds ($371.48 billion) in AUM (as of December 31, 2016), so the $4.6 billion price tag translates into 1.24 percent of its AUM. Aberdeen estimates that 16 percent of its clients are in the Americas, and it has a U.S. mutual fund business based in Philadelphia.

Standard Life's asset management arm, Standard Life Investments, has $359.6 billion in AUM (as of June 30, 2016). Its North America arm serves institutional investors.

Martin Gilbert, CEO and founder of Aberdeen, and Keith Skeoch, CEO of Standard Life, will become co-CEOs once the deal closes. Standard Life chairman Gerry Grimstone will chair the combined company, while Aberdeen chairman Simon Troughton will be the combined company's deputy chairman. Aberdeen's Bill Rattray will be chief financial officer, and Standard Life's Rod Paris will be chief investment officer.

The tentative branding plan, Gilbert says, is to have some combination of the two names in the asset management business.

Aberdeen has 2,700 employees, and Standard Life has 6,333 (including 1,700 in Standard Life Investments). Gilbert reportedly dismissed rumors of 1,000 job cuts post-merger as "way, way exaggerated" and "grossly exaggerated" but did confirm there will be "some job losses."

Skeoch reportedly says the deal will create "an asset management powerhouse."

Aberdeen's shares on the FTSE are up this morning after the deal was officially revealed. Standard Life's shares are up, too.

Check back for more updates as this story develops.

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