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MONEY MANAGEMENT

Standard Life and Aberdeen agree to merger terms

The merger of Standard Life and Aberdeen would create "one of the largest active investment managers globally."

Standard Life and Aberdeen Asset Management reached agreement on the terms of a recommended all-share merger in a deal that will create “an asset management powerhouse,” said Keith Skeoch, CEO of Standard Life.

Mr. Skeoch spoke on a media conference call Monday, alongside Martin Gilbert, CEO of Aberdeen. The two CEOs — who will become co-CEOs of the new group — updated an announcement from Saturday that the firms were in discussions over a potential merger.

The recommended all-share merger will see the firms rebranded to incorporate the names of both companies. “Obviously we have given a lot of thought to brand,” said Mr. Gilbert. The life insurance unit of Standard Life, “a very, very important part of the group,” will continue with that name. “On the asset management side it is a combination of both names,” but he added that “we obviously haven't agreed on that finally.” Mr. Gilbert said there is still work to be done on branding, and the firms must be careful not to create an acronym that means something in a foreign language.

Under the terms of the deal, Aberdeen shareholders will be entitled to receive 0.757 new shares in exchange for each Aberdeen share. Aberdeen shareholders will own about 33.3% of the merged company, and Standard Life shareholders the remaining 66.7% of the combined group.

Aberdeen Asset Management had £302.9 billion of assets under management and advice as of Dec. 31, and Standard Life's money management arm, Standard life Investments, had £277.9 billion of assets under management at that date. Standard Life's annual report said assets under administration, a measure of total assets administered on behalf of individual customers and institutional clients, including those assets for which the firm provides money management services, totaled £357.1 billion as of Dec. 31.The deal, which Messrs. Skeoch and Gilbert said will create scale and is complementary, is subject to regulatory and shareholder approval, “and we would hope to complete the transaction in the third quarter of 2017,” said Mr. Skeoch. The combined firm will be headquartered in Scotland.

Mr. Skeoch said next steps include sending a number of documents to respective shareholders with further details. Each company will then hold a general meeting, at which shareholders will be asked to approve the merger. “We strongly believe this transaction is in the best long-term interest of our respective companies,” and said it is hoped the announcement “is just the beginning of a new and exciting phase for both businesses,” added Mr. Skeoch.