ABERDEEN Asset Management is to buy Lloyds's fund management arm Scottish Widows for about £660m (€786m), creating Europe's top listed stand-alone fund manager.
Aberdeen will pay with shares worth £560m, or 9.9pc of the company, and £100m in cash over five years depending on how well it manages various Lloyds assets.
Lloyds has agreed not to sell any of its stake for a year.
The deal raises Aberdeen's assets under management by more than two-thirds to £336bn, knocking Schroders into second place and offering it diversification into fixed income and property, where Scottish Widows is stronger.
Aberdeen chief executive Martin Gilbert, who stressed in April that a bid for Scottish Widows was highly unlikely, said that adding its Solutions business, offering wealth management products to Lloyds' customers, had clinched the deal.
"Our aim is to work with Lloyds to increase its market share in wealth management . . . It's the close relationship with Lloyds customers that really attracted us to do this deal," he told reporters yesterday.
Aberdeen shares surged 13.5pc, helped by forecast-beating results showing a 24pc rise in net revenue.
Stuart Duncan, analyst at Peel Duncan, said the deal was "undoubtedly cheap on most measures". (Reuters)