Standard Life/Aberdeen £11bn merger plans reveal likely job losses
The Standard Life and Aberdeen Asset Management $11bn merger, which will create one of Europe's biggest fund managers with £600bn ($738bn) in assets, will also see hundreds of jobs lost, warns Martin Gilbert, CEO and founder of Aberdeen. However, he has dismissed reports that it will be as many as a thousand. There have also been reports of a possible counter-bid. This merger follows recent deals, such as Henderson and Janus, Amundi and Pioneer, and Fortress and SoftBank, as fund managers are increasingly under pressure over fees, poor performance and cheaper competition.
The boss of Aberdeen Asset Management has warned that hundreds of jobs could be lost following its £3.8billion takeover by rival Standard Life.

The two companies have agreed to join forces and create one of the largest fund managers in the world, with £660billion of savers' cash on its books and 9,000 staff.

Bosses expect to make cost savings of £200million a year – sparking fears of job losses at a combined group that would be worth between £11billion and £12billion.

Done deal: Standard Life boss Keith Skeoch (right) and shakes hands with his Aberdeen Asset Management's Martin Gilbert after the two companies agreed terms

'There will be some job losses where there is overlap,' said Martin Gilbert, chief executive and founder of Aberdeen. But he dismissed suggestions that as many as 1,000 jobs could go.

'We don't know the number of job losses. I don't know where that figure has come from. That is way, way exaggerated,' he said.

Aberdeen currently has 2,700 employees while Standard Life has 6,300.

Shares in both companies rose yesterday as investors welcomed the plans to merge in a deal that would give Standard Life shareholders a 66.7 per cent stake in the combined group and Aberdeen shareholders 33.3 per cent.

There was also speculation that another bidder could enter the fray.

Aberdeen rose 4.2 per cent, or 11.9p, to 298.3p while Standard Life was up 5.7 per cent, or 21.5p, to 400p.

'There must be a reasonable likelihood of a counter-bid,' said Ben Cohen of Canaccord Genuity.

Some £660billion in assets would sit under the management of the new company if the deal goes through

Rivals also saw their shares rise – with Ashmore up 1.7 per cent, or 6p, to 365.9p, and Jupiter 2.4 per cent higher, or 10.2p, at 433.2p – as investors bet on further deals in the sector.

The agreement between Aberdeen and Standard Life follows deals involving Henderson and Janus, Amundi and Pioneer, and Fortress and Softbank in recent months.

Fund managers are under pressure over the fees they charge their clients, poor performance and competition from cheaper alternatives such as index-linked funds.

Mike Clements, head of European equities at SYZ Asset Management, said: 'We think sector consolidation has some way to play out.'

Gilbert and Standard Life chief executive Skeoch defended their decision to share the top job in the combined group amid concerns it will end in disaster.

Gilbert said: 'Keith comes from an economic background. I'm from the financial side. There's more than enough for both of us to do.'

But Eamonn Flanagan, an analyst at Shore Capital, said he had 'grave concerns' about the power-sharing arrangement.

Alan Miller, of SCM Private, said: 'This is a combination of two unsuccessful companies.'