Standard Life has confirmed the terms of its £3.8bn acquisition of Aberdeen Asset Management, which will see the creation of one of the biggest fund managers in Europe with a combined £660bn in assets if the deal goes ahead.

Under the terms, Aberdeen shareholders would own 33.3 per cent and Standard Life would own 66.7 per cent, reflecting Aberdeen’s £3.8bn market capitalisation and Standard Life’s £7.5bn value.

The merger would see a new name for the new company which incorporates both Standard Life and Aberdeen.

Standard Life chairman Sir Gerry Grimstone would become chairman of the Board of the Combined Group, with Aberdeen’s chairman Simon Troughton becoming deputy chairman. Standard Life CEO Keith Skeoch and Aberdeen CEO Martin Gilbert would become co-CEOs of the Combined Group. In addition, Bill Rattray of Aberdeen and Rod Paris of Standard Life would become CFO and CIO respectively.

It is envisaged that the Board of Directors of the Combined Group would comprise equal numbers of Standard Life and Aberdeen directors. However, the deal is subject to shareholder approval and if that is obtained, the companies anticipate the merger will happen in the third quarter of 2017.

The two companies believe a merger would harness Standard Life and Aberdeen’s complementary, market leading investment and savings capabilities which would deliver a compelling and comprehensive product offering for clients covering developed and emerging market equities and fixed income, multi-asset, real estate and alternatives.

Furthermore, the companies expect £200m of annual cost synergies within three years of the merger taking place.

AJ Bell head of fund selection Ryan Hughes said: “The proposed merger between Standard Life and Aberdeen makes strategic sense for both parties. Aberdeen has been overly reliant on Asian and emerging markets for a long time and this has created significant volatility in its business performance, while Standard Life will see those Asian and emerging market assets as very complimentary to its fixed interest and UK asset base.

“If the merger goes ahead, investors can expect a long period of fund range consolidation as the combined group looks to cut costs. This could create a period of uncertainty but until more news becomes available investors would be wise to stay patient. This merger is a continuation of consolidation in the asset manager industry and I would expect to see more as the market appears to move towards huge combined groups or small specialist boutiques.”

Hargreaves Lansdown senior analyst Laith Khalaf added: “This merger is a marriage of the old and the new, both in terms of the companies’ heritage and their main areas of strength. In particular, Aberdeen’s emerging markets focus dovetails well with Standard Life’s capabilities in developed markets, though there are considerable areas of overlap between the two fund groups, particularly in multi-asset, fixed income and property strategies.

“Standard Life brings some stability to the table for Aberdeen, which has seen 15 quarters of consecutive outflows, and which will also now benefit from distribution through Standard Life’s workplace pension and wrap platform. Aberdeen meanwhile offers Standard Life a quick route to the big boy’s table by almost doubling assets under management.”

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