Watchdog go-ahead to create giant fund manager
BRITAIN’S COMPETITION watchdog has given the green light to the £11bn merger of Standard Life and Aberdeen Asset Management, which will create the UK’s biggest listed asset manager.
The Competition and Markets Authority (CMA) said on Thursday that it has decided not to refer the merger to an in-depth ‘Phase 2 investigation’, paving the way for the deal’s completion in August.
On Monday, shareholders overwhelmingly backed the tieup, with more than 95 per cent of investors at Aberdeen and 98 per cent at Standard Life voting in favour of the deal during general meetings.
The enlarged company, to be called Standard Life Aberdeen, will be headed up by Keith Skeoch and Aberdeen boss Martin Gilbert and will have a bumper 16 member board.
Mr Skeoch said it was “abundantly clear” that both men would be required at the helm of the merged firm in order to “get things done”.
The merger will create Europe’s second-biggest fund manager, with £670bn under management.
The deal, which was first announced in March, is targeting cost savings of around £200m a year.
Around 800 jobs are expected to be lost over a three-year period from a global combined workforce of 9,000.
The posts are due to be cut over three years.
The firms said they expect “natural turnover” to account for some of the reductions.
Other steps will be taken to minimise compulsory redundancies.
Aberdeen’s chairman Simon Troughton said that investors’ overwhelming support reflects the strategic and financial rationale for the deal.
“The strengths of the combined businesses ... are strongly aligned to the needs of clients now and in the future,” he said.
“The new company will have a robust balance sheet and diverse revenue streams, by asset class and distribution channel.
“This will facilitate investment in the business to support longterm growth and shareholder returns.”
He said the deal will open up significant opportunities across all facets of Aberdeen’s business and is an important step towards realising the company’s ambition of creating “a world-class investment business with a truly global footprint”.
Standard Life’s chairman Sir Gerry Grimstone said: “Our merger with Aberdeen will be one of the most significant events in our near 200-year history, creating a well-diversified worldclass investment company.
“We are still on track for a completion date of Monday, August 14 and will keep our shareholders informed of developments.”
David McCann, analyst at Numis Securities, said: “Future success in the active asset management industry will be determined by being big or small/boutique. You do not want to be stuck in the middle.
“We think the deal reflects Aberdeen and Standard Life choosing to be big.”
The merger will make the combined group a top 20 player worldwide by assets under management, he added.
Eyebrows have been raised over the proposed bonus structure that will see chief investment officer Rod Paris eligible to earn 865 per cent of his £450,000 base salary.
But two influential shareholder advisory groups, Institutional Shareholder Services and Glass Lewis, threw their weight behind the tie-up.
In addition to institutional shareholders, Standard Life also convinced a sizeable number of retail investors, which make up half of its share register.
Totalling 1.2 million people, these individual shareholders are spread across the UK.