Standard Life and Aberdeen Asset Management are expected to announce detailed plans for their £11bn merger on Monday morning, in a move that will create the second-largest fund manager in Europe.
The new £11bn company will have £660bn in combined assets under administration, making it the biggest fund manager in the UK on completion, as well as one of Scotland’s biggest companies.
The merger will involve cost savings of around £200m – much of which could come through job cuts in operational and back-office roles. Standard Life employs 6,300 people, while Aberdeen employs 2,700.
Talks were already in an extremely advanced stage before the deal leaked over the weekend, with an announcement previously planned for Tuesday.
The deal is an offensive move to create a strong asset manager, sources close to the deal insisted. In a joint statement after the deal was leaked the companies said the merger would “establish one of the largest and most sophisticated investment solutions offerings globally.”
However, both companies have had a torrid few years. Standard Life’s share price has fallen by around 24 per cent since peaking in May 2015, while Aberdeen has seen its stock lose around 44 per cent of its value since its high point in April of the same year.
Last week Aberdeen recorded its 15th consecutive quarterly outflow in assets.
Scale may have been a significant driver of the deal, as active managers look to secure themselves against cheaper tracker funds.
Eamonn Flanagan, an analyst at Shore Capital, said: ““This feels quite defensive. The rise of passive funds is clearly an issue.”
The deal’s focus on creating an asset management force also raises concerns on Standard Life’s insurance book, Flanagan said.
Standard Life shareholders will own two-thirds of the new company’s stock, with Aberdeen taking the other third.
However, both companies will have equal representation on the board, and Keith Skeoch of Standard Life and Martin Gilbert of Aberdeen will stay on as co-chief executives.