Don’t assume the planned merger between Scottish asset managers Standard Life (SL.) and Aberdeen Asset Management (AND) is a done deal. Experts believe either party could receive a counter-bid.
Standard Life’s proposal would see its shareholders own two thirds of the combined business, so you could argue this is really a takeover of Aberdeen and not a merger.
Aberdeen has been a takeover target for a while, given a lengthy period of investors pulling money out of its funds which has resulted in a weak share price.
Both Aberdeen and Standard Life have also been hit by the growth of passive investing through products such as exchange-traded funds.
Canaccord Genuity analyst Ben Cohen comments: ‘There must be a reasonable likelihood of a counter-bid, for one or both of the parties, given accelerating consolidation in the asset management industry.
‘With Standard Life the senior party, Aberdeen shareholders could well argue for a control premium above the c.1x price to earnings premium on which Standard Life trades versus Aberdeen, which could alter the economics for Standard Life shareholders, if final terms are indeed different.’
Investment bank Jefferies estimates the current merger plan would lift Standard Life’s earnings per share by 11% in 2018. That assumes the two companies achieve the expected cost savings from their business combination.
ETX Capital analyst Neil Wilson says: ‘Scale is essential and that’s why this deal also makes sense as an offensive move - it will create a Scottish investing powerhouse capable of taking on the US giants.
‘As today's statement reveals, the merger will create one of the largest active investment managers globally with £660bn of assets under administration - well above current UK leader Schroders.’
