Aberdeen Asset Management has confirmed it is in talks about a possible takeover of Edinburgh-based global fund management Scottish Widows Investment Partnership (SWIP).
North-east-based AAM informed the London Stock Exchange that it was eyeing a bid for the asset management arm of the Lloyds Banking Group, after speculation over its intentions forced its hand.
It is thought a deal for SWIP, which would also involve the formation of a new strategic partnership with Lloyds, could cost AAM around half a billion pounds.
AAM are proposing an all-share arrangement for SWIP, similar to a deal for Credit Suisse in 2008, which would see Lloyds hold a significant stake in the Aberdeen firm post completion.
Australian bank Macquarie are also understood to be interested in SWIP, although they have yet to declare their intent.
SWIP is one of Europe’s largest asset management companies with a total of more than £145 billion of funds under management at the end of June this year.
The firm, which has offices in London and New York in addition to its Edinburgh HQ, is headed by managing director Dean Buckley and is a major player in equities, fixed income and socially responsible investment.
AAM, which is led by high-profile chief executive Martin Gilbert, said a tie-up would be “materially earnings enhancing” and would reinforce the company’s commitment to a progressive dividend policy.
“Aberdeen Asset Management notes recent press speculation and confirms that it is in discussions with Lloyds Banking Group in relation to a possible acquisition of Scottish Widows Investment Partnership and the formation of a strategic partnership with Lloyds,” the firm told investors.
“The potential acquisition would add further scale and diversity to the company’s product range, thus complementing organic growth, consistent with the board’s strategy.
“If agreed, the acquisition would be funded through the issuance of new shares in the company to Lloyds and additional deferred payments in cash, conditional on the performance of the partnership over a period of years.
“The proposed transaction would also offer substantial cost efficiencies and synergies. The company would expect any transaction agreed to be materially earnings per share enhancing.
“It would also reinforce the company’s commitment to a progressive dividend policy and to return surplus capital to shareholders over time.”
AAM stressed that a deal may not emerge from its discussions and said it would make further statements to the market when appropriate.