Speculation rises on Widows deal amid £11bn merger

● Standard Life and AAM shareholders vote today on merger as new twist looms

The shareholder votes today on Standard Life’s £11 billion marriage with Aberdeen Asset Management (Aam)come amid rising City speculation that it could foreshadow a merger of Standard’s life assurance arm with Scottish Widows.

Such a move would unite two of Edinburgh’s historical archrivals in the life and pension sector. The deal to create a new fund management giant called Standard Life Aberdeen needs the support of 75 per cent of AAM investors who vote, and 50 per cent of Standard’s army of 1.2 million shareholders since its demutualisation. But both companies declined to comment yesterday on weekend reports that talks about a deal with Widows, owned by Lloyds Bank, will start later this summer should the transaction with AAM go through.

Completion of the Standard/aberdeen merger is expected by mid-august. At an analyst and investor conference in March when the deal with Aberdeen was announced, Standard’s chief executive, Keith Skeoch, was asked whether it was moving towards an investment house and away from life assurance.

Skeoch said: “We are – yes, you are right in terms of becoming more of a worldclass investment company than a life assurer. I would argue this is a process that was put in place about 13 years ago.” Standard Life Aberdeen would be a top 20 global fund manager, with £670bn under management.

Skeoch was also asked about where the deal left Standard’s annuity business and replied the company had not ruled out selling it.

Lloyds Bank, which has recently returned fully to private ownership after gradually selling off the entire 40 per cent-plus taxpayer stake taken in the financial crash, sold the fund management business of Widows to AAM three years ago.

As part of that transaction the bank has a near-10 per cent holding in AAM, whose chief executive, Martin Gilbert, will be joint chief executive of Standard Life Aberdeen with Skeoch.

On page 74 of the Standard/ Aberdeen merger prospectus, it says: “Since Aberdeen acquired Scottish Widows Investment Partnership Limited in 2014, Aberdeen and Lloyds have enjoyed a strong business partnership and Lloyds remains a key customer of Aberdeen.

“It is the intention that the Combined Group will explore ways in good faith to build a successful relationship with Lloyds for the benefit of their respective customers, businesses, shareholders and other stakeholders.”

The prospectus also confirmed that Lloyds had agreed to a six-month delay from the completion of the merger before possibly activating any change of control clause in its business relationship with AAM.

Standard’s investor meeting today is in the Assembly Rooms in Edinburgh, while Aberdeen’s meeting will be at its London offices.