Standard Life agrees £11bn merger with Aberdeen Asset Management
Standard Life and Aberdeen Asset Management have agreed terms on an £11 billion merger that will create Britain's biggest asset manager.
The deal would create one of the world's industry powerhouses, overseeing £660 billion worth of global assets.
Under the terms of the deal, Aberdeen shareholders would own 33.3% and Standard Life shareholders would own 66.7% of the combined group.
However, it is thought several hundred jobs are at risk in Scotland and in the City as the duo pointed to cost savings that could add up to £200 million.
Edinburgh-based Standard Life employs over 8,000 and Aberdeen has over 2,800 staff.
Nevertheless, a Scottish Government spokesperson welcomed the deal: "The proposed merger is a potential vote of confidence in Scotland's financial services sector.
"We will be engaging with both companies as the merger progresses to discuss employment and investment in Scotland.
"We welcome the intention to grow the business in Scotland and to build on the expertise and skills of both companies and strengthen Scotland's reputation for fund and asset management."
Following completion of the merger, which values Aberdeen at £3.8bn, Standard Life chairman Sir Gerry Grimstone will become chairman of the combined entity.
Standard Life chief executive Keith Skeoch and Aberdeen boss Martin Gilbert will become co-chief executives of the new firm.
The companies said the deal was still subject to a number of conditions, including shareholder approvals, but recommended that investors vote the deal through.
The new firm will have its headquarters in Scotland and Mr Gilbert said the move will enable the enlarged business to "compete effectively on the global stage".
Mr Skeoch said: "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."
Investors welcomed the news, with shares in Standard Life up 5.4% in afternoon trading, while Aberdeen was up 4.5%.
Ryan Hughes, head of fund selection at AJ Bell, said: "The proposed merger between Standard Life and Aberdeen makes strategic sense for both parties.
"Aberdeen has been overly reliant on Asian and emerging markets for a long time and this has created significant volatility in its business performance, while Standard Life will see those Asian and emerging market assets as very complementary to its fixed interest and UK asset base.
"If the merger goes ahead, investors can expect a long period of fund range consolidation as the combined group looks to cut costs.
"This could create a period of uncertainty but until more news becomes available investors would be wise to stay patient."