Following confirmation of Standard Life Investments' takeover of Ignis, analysts say the overlap between the businesses is the main factor behind the deal.
'While we view the acquisition as likely to benefit Standard Life, we view the key driver as cost synergies,' Panmure Gordon analyst Barry Cornes said in a note.
He noted that last year, SLI had a EBITDA margin of 37% versus Ignis' 35%. The combined business will now target 45% by the end of 2017, up from SLI's inititial target of 40%.
'Obviously we need to consider relevance - the purchase price is just 4% of market cap,' Gordon Aitken, analyst at RBC Capital Markets said, adding that 'SLI clearly thinks it's a bigger deal'.
The analyst said that not only was the price a positive, but the acquisition 'looks an attractive way of offsetting the annuity headwinds,' following regulatory changes to pensions announced in this year's Budget.