You can’t run one firm with two chiefs

As fund houses de­fend their £11bn tie-up, in­vestors say...

Daily Mail - - City & Finance - by Hugo Duncan

STAN­DARD Life and Aberdeen As­set Man­age­ment have sought to al­lay in­vestor fears over their plans to have two chief ex­ec­u­tives fol­low­ing their £11bn merger.

The two com­pa­nies are join­ing forces to cre­ate one of the largest fund man­agers in the world with £660bn of savers’ cash on its books and 9,000 staff.

But the plan for Stan­dard Life chief ex­ec­u­tive Keith Skeoch ( pic

turedright) and his coun­ter­part at Aberdeen, Martin Gil­bert ( above), to share the top job once the deal is com­pleted has been crit­i­cised by share­hold­ers.

In­vestors fear the power-shar­ing ar­range­ment be­tween the pair – old friends who go fish­ing to­gether – will end in dis­as­ter.

One lead­ing share­holder in both firms told the Fi­nan­cial Times: ‘The co-chief ex­ec­u­tive struc­ture fun­da­men­tally won’t work.’ An­other said: ‘There are 100 case stud­ies of this not end­ing well.’

The two firms have now out­lined how their re­spon­si­bil­i­ties will be split – with Gil­bert in­sist­ing it will work be­cause ‘we are both team play­ers’. Skeoch, 60, will take on the day-to-day run­ning of the com­bined group while Gil­bert, 61, will look af­ter ‘ex­ter­nal mat­ters’ such as mar­ket­ing and build­ing re­la­tion­ships with clients.

There will also be a ‘ chair­man’s com­mit­tee’ to over­see the merger. It will be headed by Stan­dard Life chair­man Sir Gerry Grim­stone and in­clude Si­mon Troughton, chair­man of Aberdeen and deputy chair­man of the com­bined group, as well as Skeoch and Gil­bert.

Skeoch claimed that the struc­ture would ‘pro­vide clear lead­er­ship and sta­bil­ity’.

Gil­bert, co-founder of Aberdeen, said: ‘Keith and I have es­tab­lished a strong work­ing re­la­tion­ship dur­ing the deal process, and the mu­tual re­spect and trust which has been es­tab­lished will form the ba­sis of our on­go­ing work­ing re­la­tion­ship.

‘We are both team play­ers and see the ben­e­fit of del­e­gat­ing de­ci­sion­mak­ing as well as seek­ing guid­ance from oth­ers to for­mu­late clear strate­gic ob­jec­tives.

‘We will draw on our com­ple­men­tary strengths and skill sets to lead the com­bined com­pany.’

Grim­stone said: ‘Both boards have thought care­fully about the key re­spon­si­bil­i­ties and be­lieve that the pro­pos­als play well to Keith’s and Martin’s re­spec­tive lead­er­ship strengths. This blend of com­ple­men­tary skills and ex­pe­ri­ence will serve the com­pany well.’

Peter Le­nar­dos, an an­a­lyst at RBC, said that while the state­ment was help­ful in sooth­ing con­cerns about the power-shar­ing struc­ture, ‘in­vestors’ pri­mary con­cerns re­late to on­go­ing net out­flows at each busi­ness, and the po­ten­tial for fur­ther dis­rup­tion as the busi­nesses in­te­grate’.

Stan­dard Life shares rose 1.1pc, or 3.9p, to 363.7p, valu­ing it at £7.2bn, while Aberdeen was up 0.3pc, or 0.7p, at 267.3p, giv­ing it a value of £3.5bn.



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