INVESTORS sent Aberdeen Asset Management to the top of the FTSE 250 yesterday after it confirmed a deal worth up to £650m to buy Scottish Widows Investment Partnership (Swip), making it the biggest investment house in Europe.
The long-rumoured deal will see Aberdeen pay Swip’s current owner Lloyds £550m in shares, plus an extra £100m in cash over the next five years depending on performance.
Aberdeen boss Martin Gilbert, who has led at least seven takeovers for Aberdeen over the past decade, said the firm would now be happy to stay on the M&A sidelines for the next two years – the length of time it will take for the firms to fully integrate.
“Having done this deal it precludes us from doing another one for a couple of years,” Gilbert said. “It will take two years to integrate but it gives us a good financial platform in the US.”
Yesterday’s tie-up, which gives Lloyds a 9.9 per cent Aberdeen stake, makes Aberdeen the sixth largest money manager on earth and a challenger to US fund giants. The deal also sees Aberdeen acquire Lloyds’ wealth manager Investment Solutions – its platform for well heeled clients.
Lloyds will work in with Aberdeen to sell funds, and receive £100m after five years if the tie-up is successful.
The acquisition follows a prolonged sale process which saw Gilbert dismiss buying Swip in the summer, and a late rival bid from Macquarie.
“It was the inclusion of Investment Solutions into the deal that brought us back to the table,” Gilbert said.
“This is all about growing the combined business, this wasn’t prefaced on cost cutting.”