Aberdeen Asset Management has formed a "strategic relationship" with Lloyds Banking Group and, as part of the deal, will acquire Scottish Widows Investment Partnership for approximately £650m.
The acquired business includes the Investment Solutions division of SWIP which is responsible for the design, development and management of investment solutions for Lloyds' wealth clients.
The strategic relationship will operate across Lloyds' wealth, insurance, commercial banking and retail businesses. The deal is subject to regulatory approval and the insurance and pensions group Scottish Widows is not included.
Aberdeen will pay approximately £550m in a mostly shares-based deal (based on an Aberdeen share price of 420 pence per share) and 131.8 million new Aberdeen shares will be issued to Lloyds, equivalent to an approximate 9.9% stake in the enlarged group.
In addition, there will be a performance-related five year earn-out payment of up to £100m dependent on growth delivered by the strategic relationship with Lloyds. The acquired business will add approximately £136 billion of assets under management with annualised revenues of about £234 million to the group.
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It's not yet known what consolidation may occur between the merged groups but the agreement includes the transfer of SWIP funds to the Aberdeen platform.
Aberdeen, an IFP corporate member, says the acquisition adds "breadth and depth" to Aberdeen's existing product offering and elevates Aberdeen to a top five position (by AUM) in the UK retail market.
Martin Gilbert, chief executive of Aberdeen, said: "This transaction is significant for the long-term prospects of Aberdeen in a number of ways.
"It strengthens our investment capabilities and adds new distribution channels. The acquisition of SWIP adds scale to our business across a range of asset classes and it also introduces a strategic relationship with Lloyds Banking Group."
• Aberdeen also announced its annual results today. These showed net revenue was 24% higher at £1,078.5 million (2012: £869.2 million) and underlying profit before tax increased by 39% to £482.7 million (2012: £347.8 million). Assets under management increased by 7% to £200.4 billion (2012: £187.2 billion)