Asset managers have been working on investors becoming more fond of cheaper passive funds. On March 6, 2017, there was a move to shake Standard Life Plc, the Scottish financial services sector. And Aberdeen Asset Management Plc. The £ 11 billion ($ 14.7 billion) merger created the second largest fund manager in Europe.
The two companies estimate that the move will result in a cost savings of approximately £ 200 million within three years. The newly established entity, operating under the name Standard Life Aberdeen (ABDN), was under the control of £ 670 billion ($ 817 billion) after the merger completed on August 14, 2017.
In January 2017, Aberdeen Asset Management and Standard Life began serious discussions on business integration. Behind the scenes, the process seemed to go smoothly. Martin Gilbert, CEO of Aberdeen at the time, said that despite the company’s financial instability, neither shareholders nor the company’s finances felt pressure to join Standard Life.
“We didn’t have to make a deal. According to Bloomberg, Gilbert said in a phone call with reporters.” To be clear, if you want to be an independent company, a very good future. had.”
But for Aberdeen, the merger provided some relief from its struggling business. Salaries have been frozen and it is reported that they were considering reducing dividends to reduce costs. Standard Life, which is almost twice as valuable as Aberdeen, provided stability.
As a result of the merger, Standard Life shareholders acquired 66.7% of the new company. Aberdeen’s shareholders, who own 33.3%, received 0.757% of the new company’s shares for each Aberdeen share held. The arrangement was in line with the market value of each company before the merger discussion was announced in March.
Gilbert and Keith Skeoch, CEO of Standard Life, initially led a new integration company to combine the company’s operations to improve efficiency. “Many people have questioned the wisdom of this relationship between these two very large personalities, but in reality, these two are substantive,” said Justin Bates, an analyst at Libera Bank. It is very wise to involve both in the integration of the business. ” Financial Times.
Since then, both have quit their businesses. Steven Burd, the former Citigroup, has been CEO since July 2020.
On July 5, 2021, Standard Life Aberdeen officially renamed it ABRDNplc (pronounced “aberdeen”). In 2018, we sold Standard Life Assurance to the Phoenix Group.
In a joint statement, the two companies said the acquisition was supported by Aberdeen shareholders. Among them, Mitsubishi UFJ Financial Group holds a 17% stake in Aberdeen and is the largest shareholder. Lloyds Banking Group Plc, which holds a 10% stake in Aberdeen and holds the third largest stake, also agreed with the merger, the two companies said.
Analysts generally expressed positive sentiment towards the merged company. Citigroup analysts said the new company will offer “better growth” than Standard Life alone. The company also believed that the merged company would be in a “better strategic position” than it would be with Aberdeen Assets alone. In a memo to the client, the analyst said, “We see an upside due to the synergies of costs.”
However, some analysts and newspapers predict that the merger will require a layoff: Telegraph. Together, Standard Life employed approximately 8,335 people, and Aberdeen employed 2,800. As of 2021, the merged company will have more than 5,000 employees.
Aberdeen had previously considered other options for the merger, such as bidding on Pioneer Global Asset Management. When he refused the deal, analysts began to suspect that another option might be at the table.
When the merger was announced in March, the shares of both companies rebounded on the London Stock Exchange. Standard Life Aberdeen began by competing with other major asset managers, including giants such as BlackRock (BLK) and The Vanguard Group.