Scottish investors Aberdeen, Standard Life mull $14 billion merger

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Aberdeen Asset Management (ADN. L) and Standard Life (SL. L), two of Scotland's most well-known financial firms, said on Saturday they were in talks over an 11 billion pound ($13.5 billion) merger to create one of the world's largest active investment managers. Fund management companies across the globe have been burdened with rising regulatory costs and pressure to lower fees in the face of weak average returns and growing competition from cheaper, index-tracking rivals. While Standard Life, famous for selling insurance, is roughly twice the size of Aberdeen at 7.5 billion pounds, the two firms' assets under management and administration are broadly comparable. Together, they would manage assets of about 660 billion pounds for a range of retail and institutional clients, more than double those of Henderson Group (HGGH. L) and Janus Capital Group (JNS. N), which last year agreed their own $6 billion all-share merger.

"Further to the recent press speculation the Boards of Standard Life and Aberdeen confirm that they are in discussions in relation to a possible all-share merger of Standard Life and Aberdeen," they said, confirming an earlier Sky News report."The potential merger represents an excellent opportunity to leverage Standard Life and Aberdeen's combined strengths to create a world class investment company," they said.

Under the terms of the proposed deal, Aberdeen shareholders would own 33.3 percent of the combined group under the terms of the potential merger, with Standard Life shareholders owning the other 66.7 percent, the companies said. Under the deal, Aberdeen shareholders would receive 0.757 of a new Standard Life ordinary share for each Aberdeen ordinary share. Other terms of the proposed deal were still being discussed, they said.

Standard Life Chairman Gerry Grimstone would become chairman of the board of the combined group, with Aberdeen Chairman Simon Troughton becoming deputy chairman. Keith Skeoch, chief executive of Standard Life, and Martin Gilbert, his counterpart at Aberdeen, would share the CEO's role at the new company.