Aberdeen Asset Management is to acquire Scottish Widows Investment Partnership (SWIP) in a £550m (€657m) deal that will also see it partner with one of the UK’s largest banking groups’ wealth businesses.

The agreement, subject to regulatory approval, will see Aberdeen AM’s assets under management grow by more than £130bn, the company said, highlighting that SWIP’s acquisition would enhance its fixed income and property divisions.

Lloyds Banking Group will take a 9.9% stake in Aberdeen AM as part of the deal, accounting for the £550m cost based on the latter’s share price of £4.20 – below the £4.27 closing price last Friday.

The asset manager’s shares opened at £4.79 on the London Stock Exchange on Monday morning, rising to £4.91 by mid-day local time.

Martin Gilbert, chief executive at Aberdeen AM, said the firm was “confident” the transaction would deliver considerable additional value to the company’s shareholders and client base.

“This transaction is significant for the long-term prospects of Aberdeen in a number of ways,” he said. “It strengthens our investment capabilities and adds new distribution channels; the acquisition of SWIP adds scale to our business across a range of asset classes; and it also introduces a strategic relationship with Lloyds Banking Group.”

Lloyds has agreed to hold all of the new 131.8m shares issued by Aberdeen AM for 12 months and is committed to retaining two-thirds of its stake for two years.

Three years after the deal has finalised, it will be allowed to sell down all but one-third of its total stake.

Aberdeen added that the acquisition of SWIP’s private equity and infrastructure businesses would be independent of the remainder of the deal, and that failure of them to complete would see a reduction in the £550m consideration.

As part of the agreement, Lloyds and Aberdeen have agreed to a “comprehensive strategic relationship” that will see the businesses work together with Lloyds Wealth, Insurance and both commercial and retail banking businesses.

Topics