GBP 3.8 BN DEAL - Standard Life plc SL. Standard Life and Aberdeen agree Terms

Recommended All-Share Merger
of
Standard Life plc and Aberdeen Asset Management PLC

Summary

The Boards of Standard Life plc ("Standard Life") and Aberdeen Asset Management PLC ("Aberdeen") are pleased to announce that they have reached agreement on the terms of a recommended all-share merger of Standard Life and Aberdeen, to be effected by means of a court-sanctioned scheme of arrangement between Aberdeen and the Aberdeen Shareholders under Part 26 of the Companies Act 2006 (the "Merger"). The Combined Group will in due course be branded to incorporate the names of both Standard Life and Aberdeen.

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Under the terms of the Merger, holders of Aberdeen Shares will be entitled to receive:

0.757 New Shares in exchange for each Aberdeen Share

Based on this exchange ratio (the "Exchange Ratio") and the Closing Price of 378.5 pence per Standard Life Share on 3 March 2017 (being the last Business Day prior to the date of this Announcement), the Merger values each Aberdeen Share at 286.5 pence and Aberdeen's existing issued ordinary share capital at approximately £3.8 billion.

Following completion of the Merger, Aberdeen Shareholders would own approximately 33.3 per cent. and Standard Life Shareholders would own approximately 66.7 per cent. of the Combined Group on a diluted basis.

Compelling Strategic and Financial Rationale

The Merger has a compelling strategic and financial rationale through combining Standard Life's and Aberdeen's complementary strengths to create a world class investment group.

The Boards of Standard Life and Aberdeen believe that the Merger will:

·      Harness Standard Life's 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.

·      Reinforce both Standard Life's and Aberdeen's long-standing commitment to active management, underpinned by fundamental research, with both global reach and local depth of resources.

·      Establish one of the largest and most sophisticated investment solutions offerings globally, positioning the Combined Group to meet the evolving needs of clients.

·      Create an investment group with strong brands, leading institutional and wholesale distribution franchises, market leading platforms and access to long-standing, strategic partnerships globally.

·      Bring scale, as one of the largest active investment managers globally with £660 billion of pro forma assets under administration and financial strength, transforming the Combined Group's ability to invest for growth, innovate and drive greater operational efficiency.

·      Deliver through increased diversification an enhanced revenue, cash flow and earnings profile and strong balance sheet that is expected to be capable of generating attractive and sustainable returns for shareholders, including dividends.

·      Result in material earnings accretion for both sets of shareholders, reflecting the significant synergy potential of the Merger.

The Combined Group

The Combined Group will be headquartered in Scotland.

The Combined Group will draw on its broad expertise and harness the talent in both companies to optimise the benefits for clients and shareholders.

Following completion of the Merger:

·      Sir Gerry Grimstone, Chairman of Standard Life, will become Chairman of the Board of the Combined Group, with Simon Troughton, Chairman of Aberdeen, becoming Deputy Chairman.

·      Keith Skeoch, CEO of Standard Life, and Martin Gilbert, CEO of Aberdeen, will become co-CEOs of the Combined Group. 

·      Bill Rattray, of Aberdeen, and Rod Paris, of Standard Life, will become CFO and CIO respectively.

·      It is envisaged that the Board of the Combined Group will comprise equal numbers of Standard Life and Aberdeen directors.

·      Standard Life and Aberdeen have agreed that the Combined Group will include, and operate under, branding drawn from both the Standard Life Group and the Aberdeen Group.

 

Under the terms of the Merger, Standard Life and Aberdeen have agreed that:

 

·      Standard Life Shareholders will be entitled to receive the proposed final dividend of 13.35 pence per Standard Life Share for the six month period ended 31 December 2016, scheduled to be paid on 23 May 2017 (subject to approval at the Standard Life Annual General Meeting); and

·      Aberdeen Shareholders will be entitled to receive an interim dividend of up to 7.5 pence for the six month period ended 31 March 2017, scheduled to be paid in June 2017 (subject to approval by the Board of Aberdeen).

Further details of the arrangements in respect of dividends are set out in paragraph 6 below.

Recommendations

The Aberdeen Recommending Directors, who have been so advised by J.P. Morgan Cazenove and Credit Suisse as to the financial terms of the Merger, consider the terms of the Merger to be fair and reasonable. Credit Suisse is providing independent financial advice to the Aberdeen Recommending Directors for the purposes of Rule 3 of the City Code. In providing their financial advice to the Aberdeen Recommending Directors, J.P. Morgan Cazenove and Credit Suisse have taken into account the commercial assessments of the Aberdeen Recommending Directors.

Accordingly, the Aberdeen Recommending Directors intend unanimously to recommend that Aberdeen Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions relating to the Merger at the Aberdeen General Meeting (or in the event that the Merger is implemented by way of an Offer, to accept or procure acceptance of such Offer) as the Aberdeen Recommending Directors who hold Aberdeen Shares have irrevocably undertaken to do or procure in respect of their own beneficial holdings of 2,315,275 Aberdeen Shares in aggregate and representing approximately 0.2 per cent. of Aberdeen's issued share capital on 3 March 2017 (being the last Business Day prior to the release of this Announcement). Further details of these irrevocable undertakings are set out in Appendix 3 to this Announcement.

Akira Suzuki, a non-executive director of Aberdeen, is also managing executive officer of MUTB. MUTB has given a non-binding statement of support in respect of the Merger in its capacity as shareholder and ongoing business partner. In view of Akira Suzuki's position within MUTB and MUTB's interest in Aberdeen, Akira Suzuki has recused himself from the Board of Aberdeen in respect of all matters relating to the Merger.

As a result of its size, the Merger constitutes a Class 1 transaction for Standard Life for the purposes of the Listing Rules. Accordingly Standard Life will be required to seek the approval of the Standard Life Shareholders for the Merger at the Standard Life General Meeting. The Merger will also be conditional on the approval of the Standard Life Shareholders of the issuance of the New Shares at the Standard Life General Meeting. The Standard Life Directors consider the Merger to be in the best interests of Standard Life and the Standard Life Shareholders as a whole and intend unanimously to recommend that Standard Life Shareholders vote in favour of all of the resolutions to be proposed at the Standard Life General Meeting which will be convened in connection with the Merger, as they have irrevocably undertaken to do, or procure, in respect of their own beneficial holdings of 3,455,242 Standard Life Shares representing, in aggregate, approximately 0.2 per cent. of Standard Life's ordinary share capital in issue on 3 March 2017, being the last Business Day prior to the release of this Announcement.

The Standard Life Directors have received financial advice from Goldman Sachs International in relation to the Merger. In providing their advice to the Standard Life Directors, Goldman Sachs International has relied upon the Standard Life Directors' commercial assessment of the Merger.

Statements of Support

Standard Life and Aberdeen have received non-binding statements of support to vote in favour of the Scheme from each of MUTB and Lloyds, in respect of shares representing, in aggregate, approximately 27 per cent. of Aberdeen's existing issued ordinary share capital on 3 March 2017 (being the last Business Day prior to the release of this Announcement). 

Further details of these statements of support are set out at paragraph 15 and Appendix 3 to this Announcement.

General

It is intended that the Merger will be implemented by way of a court-sanctioned scheme of arrangement between Aberdeen and the Aberdeen Shareholders under Part 26 of the Companies Act 2006, further details of which are contained in the full text of this Announcement and which will be set out in the Scheme Document. However, Standard Life reserves the right, with the consent of the Panel and Aberdeen or, in certain circumstances, without the consent of Aberdeen, to implement the Merger by way of a takeover offer (as defined in Part 28 of the Companies Act 2006), in accordance with the terms of the Cooperation Agreement.

The Merger will be subject to the Conditions and certain further terms set out in Appendix 1 to this Announcement and to the full terms and conditions which will be set out in the Scheme Document, including the approval of the Scheme by the Scheme Shareholders, the sanction of the Scheme by the Court and the approval of Standard Life Shareholders. The Conditions include the receipt of various antitrust approvals and other regulatory consents as further described in Part A of Appendix 1 to this Announcement.

The Scheme Document will include full details of the Scheme, together with notices of the Court Meeting and the Aberdeen General Meeting and the expected timetable, and will specify the action to be taken by Scheme Shareholders.  It is expected that the Scheme Document will be despatched to Aberdeen Shareholders in early May 2017.  For the purposes of paragraph 3(a) of Appendix 7 of the City Code and with the agreement of the Aberdeen Directors, the Panel has consented to this arrangement.

It is expected that the Prospectus, containing information about the New Shares, will be published at the same time as the Scheme Document is posted to Aberdeen Shareholders. It is also expected that the Circular, containing details of the Merger and notice of the Standard Life General Meeting, will be posted to Standard Life Shareholders at the same time as the Scheme Document is posted to Aberdeen Shareholders, with the Standard Life General Meeting being held at or around the same time as the Aberdeen Meetings.

The Scheme is expected to become effective in the third quarter of 2017, subject to the satisfaction or waiver of the Conditions and certain further terms set out in Appendix 1 to this Announcement.

·      Commenting on the Merger, Keith Skeoch, CEO of Standard Life said:

"We have always been clear that it is Standard Life's ambition to become a world-class investment company and that this would be achieved through continued investment in diversification and growth, coupled with a sharp focus on financial discipline. We are therefore delighted that this announcement marks another important step towards achieving that ambition. The combination of our businesses will create a formidable player in the active asset management industry globally. We strongly believe that we can build on the strength of the existing Standard Life business by combining with Aberdeen to create one of the largest active investment managers in the world and deliver significant value for all of our stakeholders."

·      Commenting on the Merger, Martin Gilbert, CEO of Aberdeen said:

"We believe this merger is excellent for our clients, bringing together the strong and highly complementary investment capabilities of each firm with a breadth and depth of talent unrivalled amongst UK active managers and positioning the business to meet the evolving needs of clients and customers. This merger brings financial strength, diversity of customer base and global reach to ensure that the enlarged business can compete effectively on the global stage."

·      Commenting on the Merger, Sir Gerry Grimstone, Chairman of Standard Life said:

"This merger brings together two fine companies and I'm greatly honoured to be asked to chair the combination. I look forward to welcoming our new colleagues. We will be successful as long as we continue to put our clients. customers, employees and good governance at the heart of what we do."

·      Commenting on the Merger, Simon Troughton, Chairman of Aberdeen said:

"The strategic fit is compelling and creates a business with minimal client overlap and which is diversified by revenues, asset class and distribution channel. The combination will result in a material enhancement to earnings and this, coupled with a strong balance sheet, will facilitate significant investment in the business to support growth, innovation and a progressive dividend policy."

This summary should be read in conjunction with the full text of this Announcement and the Appendices.

The Merger will be subject to the Conditions and further terms set out in Appendix 1 to this Announcement and to the full terms and conditions which will be set out in the Scheme Document. Appendix 2 contains the sources and bases of certain information used in this summary and this Announcement. Appendix 3 contains details of the irrevocable undertakings and statements of support received in relation to the Merger that are referred to in this Announcement. Appendix 4 contains details of and bases of calculation of the anticipated quantified financial benefits of the Merger. Appendix 5 contains definitions of certain terms used in this summary and this Announcement.

For the purposes of Rule 28 of the City Code, the quantified financial benefits statement contained in this Announcement is the responsibility of Standard Life and the Standard Life Directors. Appendix 4 sets out the anticipated quantified financial benefits statement relating to cost savings and synergies arising out of the Merger and provides underlying information and bases of belief. Appendix 4 also includes reports from Standard Life's reporting accountant, PricewaterhouseCoopers LLP, and its financial advisers, Goldman Sachs International, in connection with the anticipated quantified financial benefits statement, as required pursuant to Rule 28.1(a) of the City Code, and provides underlying information and bases for the accountant's and advisers' respective reports. Each of PricewaterhouseCoopers LLP and Goldman Sachs International has given and not withdrawn its consent to the publication of its report in this Announcement in the form and context in which it is included.

Analyst and investor presentation

Standard Life and Aberdeen will jointly host a presentation for analysts and investors at Goldman Sachs International, River Court, 120 Fleet St, London EC4A 2BE with a conference call and webcast at 10.30 a.m. (UK time) today (6 March 2017) to discuss the Merger. To participate in this conference call, please use the following access details:

Phone Number: 0800 279 4992 / +44 (0)20 3427 1901; Participant Code: 752 0186

To access the webcast, please visit: http://edge.media-server.com/m/p/xex57db6

Enquiries:

Standard Life

Media Enquiries

Investor Enquiries

Barry Cameron, Head of Strategic Communications
+44 (0) 7712 486 463

Jakub Rosochowski, Investor Relations Director
+44 (0) 7515 298 608

Steve Hartley, Senior Corporate Communications Manager
+44 (0) 7702 934 651

  

Neil Longair, Investor Relations Manager
+44 (0) 7711 357 595

Goldman Sachs International (Financial Adviser and Corporate Broker to Standard Life)  +44 20 7774 1000
Todd Leland                                                                                                                                            
Mark Sorrell
John Brennan
Owain Evans
Charlie Lytle (Corporate Broking)

Tulchan Communications LLP (Communications Adviser to Standard Life)
Michelle Clarke
Andrew Grant                                                                                                                                        +44 (0)207 353 4200

Aberdeen
James Thorneley, Head of Corporate Communications                                                                         +44 20 7463 6323      
Shelley Fishwick, Group Investor Relations                                                                    +44 20 7463 6327     

J.P. Morgan Cazenove (Financial Adviser and Corporate Broker to Aberdeen)                   +44 20 7742 4000
Conor Hillery
Dwayne Lysaght
Edward Squire
James Robinson                                                                                                                                     

Credit Suisse International (Financial Adviser and Corporate Broker to Aberdeen)          +44 20 7888 8888
Hamish Summerfield
Andrew Forrester
Joe Hannon
Samie Zare                                                                                                                             

Cenkos Securities PLC (Corporate Broker to Aberdeen)                                                         +44 207 397 8900
Nicholas Wells
Elizabeth Bowman
Jeremy Osler

Maitland (Public Relations Adviser to Aberdeen)                                                                        +44 207 379 5151
Neil Bennett
Kate O'Neill

Freshfields Bruckhaus Deringer LLP and Maclay Murray & Spens LLP are retained as legal advisers for Aberdeen.

Slaughter and May are retained as legal advisers for Standard Life.

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