Aberdeen and Standard Life enter into merger discussions

Two of Scotland's largest companies - Aberdeen Asset Management and Standard Life - have been exploring an £11bn merger, according to reports.

"The potential merger represents an excellent opportunity to leverage Standard Life and Aberdeen's combined strengths to create a world-class investment company".

Aberdeen shareholders would receive 0.757 new Standard Life ordinary shares for each Aberdeen ordinary share.

Under the terms of the potential merger, Aberdeen shareholders would own 33.3 percent and Standard Life shareholders 66.7 percent of the combined group.

It has a market value of £7.5bn, making it twice the size of Aberdeen, which is worth around £3.7bn.

Other terms of the proposed deal were still being discussed, they said.

Keith Skeoch, chief executive of Standard Life, and Martin Gilbert, the founder and boss of Aberdeen, would become co-chief executive officers of the combined group.

The deal is still uncertain, according to City insiders, and Aberdeen is also looking at a number of transactions in the US, including the purchase of Pioneer Investments' US business.

A source suggested to Sky job losses could be a outcome of the deal as the firms mull a prospective annual cost savings figure of £200m.

He is expected to take over from John McFarlane as chairman of Barclays when the latter steps down - a move expected by 2019.

It is envisaged the board of directors of the combined group would comprise equal numbers of Standard Life and Aberdeen directors.

Net outflows amounted to about £700 million, fuelled by more than £14 billion being pulled from its multi-asset GARS fund.

Last month Aberdeen reported big outflows from its funds following Donald Trump's victory in the United States presidential election.

Standard Life is being advised by Goldman Sachs, whose team includes the Wall Street bank's head of Emea M&A, Mark Sorrell.

Aberdeen said investor sentiment "stalled" following the U.S. election result.

"Encouragingly, despite the market volatility our equity strategies produced strong returns for the year", he said at the time.

  • Zachary Reyes