Scottish Widows acquisition plans revealed as Standard Life and Aberdeen shareholders cast merger votes
As shareholders vote today on the proposed mega merger between Standard Life and Aberdeen Asset Management, it has emerged that Standard Life is lining up another major deal in the form of the acquisition of 202-year-old life assurer and Edinburgh neighbour, Scottish Widows.
Talks about a possible deal are expected to begin this week, according to a senior City source cited by a Sunday Times report at the weekend.
The potential tie-up is linked to Standard Life’s impending £11 billion merger with Aberdeen, which bought the fund management arm of Widows in 2013 from owner Lloyds Banking Group.
As a result of that deal, Lloyds holds a near- 10 per cent stake in Aberdeen, and with post-crisis financial regulations meaning that Widows is penalising recently fully re-privatised Lloyds for owning a life assurer, the banking giant is looking to offload the subsidiary which is taking huge dividends out of the business – a total of £7.1bn since 2009.
Such a deal would unite two of Edinburgh’s historical archrivals in the life and pension sector, but finding a way to combine the traditional life and pensions businesses of Widows and Standard Life is expected to create huge economies of scale.
However, the shrinking market for products such as with profits life assurance should also minimise any competition issues.
Lloyds has already pledged its shares in support of the deal.
Talks on any hypothetical deal cannot start until after the shareholder votes over the deal to create a new fund management giant called Standard Life Aberdeen take place.
To go ahead, bosses need the support of 75 per cent of AAM investors who vote, and 50 per cent of Standard’s 1.2 million shareholders mobilised since its demutualisation.
Standard’s investor meeting today is in the Assembly Rooms in Edinburgh, while Aberdeen’s meeting will be at its London offices.