You can’t run one firm with two chiefs
As fund houses defend their £11bn tie-up, investors say...
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.