Standard Life and Aberdeen Asset Management have tonight revealed that 800 jobs will be lost as a result of their £11 billion merger and that the new company will be known as Standard Life Aberdeen.
In a prospectus to shareholders the two companies say they expect to achieve “cost synergies” where duplication exists and through growth of the new business. A number of offices will be closed.
“It is estimated that the integration and restructuring will result in a phased reduction of approximately 800 roles from the total global headcount of the combined group,” says the document.
Headcount stood at 9,000 at the end of 2016. The cuts, over three years, are expected to come in part from employee departures arising from natural turnover.
“Other appropriate steps will be taken to minimise the number of compulsory redundancies, including the active management of Aberdeen’s and Standard Life’s recruitment and vacancies,” says the document.
“As part of the planning process Aberdeen and Standard Life will look to maximise operational efficiencies including the rationalisation and consolidation of premises where Aberdeen and Standard Life already operate from multiple locations in a close geographic proximity.”
Apart from the new name for the parent company, the investment businesses of the Aberdeen Group and the Standard Life Group will be brought together in a single investment sub-group and will be named Aberdeen Standard Life Investments.
The companies insist that the deal is a merger and not a takeover of Aberdeen by Standard Life. It will create a company with £670 billion of assets under management.
The merger was announced on 6 March when it was stated that Sir Gerry Grimstone will chair the company and that Keith Skeoch, Standard Life CEO, and Martin Gilbert, his counterpart at Aberdeen, will be joint CEOs.
Tonight the companies announced that the new board will comprise the chairman, four executive directors and eleven non-executive directors. It will be made up of four women and twelve men. A 16 member board makes it among the largest in the UK.
Simon Troughton, current chairman of Aberdeen, Julie Chakraverty, Gerhard Fusenig, Richard Mully, Jutta af Rosenborg and Akira Suzuki will sit as non-executive directors on the new board. Mr Gilbert and Bill Rattray will be executive directors. They all currently serve on the board of Aberdeen.
In addition, Rod Paris, chief investment officer at Standard Life Investments will sit as an executive director.
Shares in the new company will begin trading on 14 August.
The governance structure will be as follows:
· Chairman – Sir Gerry Grimstone
· Deputy Chairman – Simon Troughton
· Senior Independent Director – Kevin Parry
· Chairman of the Nomination and Governance Committee – Sir Gerry Grimstone
· Chairman of the Audit Committee – John Devine
· Chairman of the Remuneration Committee – Richard Mully
· Chairman of the Risk and Capital Committee – Martin Pike
Resigning from the Standard Life board are executive directors Colin Clark, global client director; Barry O’Dwyer, CEO pensions and savings; and Luke Savage, CFO, together with the non-executive directors Pierre Danon and Noel Harwerth.
Mr Danon will become a member of Standard Life’s Global Advisory Panel, and Noel Harwerth will be appointed to the board of Standard Life Assurance Limited.
Sir Gerry said: “Today’s announcement is another important step towards completing the proposed merger between Standard Life and Aberdeen Asset Management.
“The directors on both boards have extensive global experience and have provided effective stewardship to grow each organisation.
“We have been able to create a diverse board which will have a strong blend of appropriate skills and knowledge. Together we will effectively oversee the successful delivery of the merger process and the future growth of the combined group.”
The prospectus, also published today, indicates that achieving the desired cost synergies will result in one-off integration cash costs of about £320 million.
It also contains a Q1 assets and flows update from Standard Life.
Mr Skeoch said: “We have made further progress in the first three months of 2017 with inflows from our growth channels, including notable growth in flows in our Pensions and Savings business.
“This has been supported by strong investment performance over the short and long-term. We continue to benefit from diversifying our sources of assets, and this strategy will be further enhanced by our proposed merger with Aberdeen.
“Standard Life remains confident about capitalising on industry trends, to meet the evolving needs of our clients and customers and to create long-term value for Standard Life Shareholders.”
Standard Life will hold a General Meeting on 19 June at the Assembly Rooms, Edinburgh to allow its shareholders to vote on the proposed merger and related matters. The resolutions will require approval by a simple majority.
Aberdeen will hold a Court Meeting and General Meeting on the same day. The scheme will require the approval of Aberdeen Shareholders at the Court Meeting (by a majority in number of the Aberdeen Shareholders present and voting – in person or by proxy – at the Court Meeting, representing not less than 75%), and the passing of a special resolution at a general meeting of Aberdeen Shareholders.