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Standard Life linked with Scottish Widows merger

Standard Life linked with Scottish Widows merger

Standard Life has been linked with a swoop on Scottish Widows. 

According to the Sunday Times, talks been the pair are due to commence this week. 

The news is linked to Standard Life's £11 billion merger with Aberdeen Asset Management, which is in its final stages and scheduled to complete in a few months. 

Scottish Widows-owner Lloyds has been exploring options for the business amid increased regulatory pressure following the credit crunch. Lloyds is reported to have backed a deal with Standard Life.

Lloyds holds a 9.9% stake in Aberdeen after selling its fund management business - Scottish Widows Investment Partnership - to the firm in 2013. 

As part of the deal Aberdeen inherited a lucrative contract to run Scottish Widows money.

The contract with Lloyds money was worth £137 million in revenue to Aberdeen in the last financial year to September 2016 and was originally scheduled to have a term of at least eight years.

According to the prospectus for the Standard Life Aberdeen merger, Lloyds ‘has the right to exercise termination rights’ and ‘make certain material unscheduled withdrawals of assets'.

However, Lloyds has agreed to delay making a decision in relation to the exercise of such termination rights or withdrawals until six months from the date of completion of the merger.

‘If Lloyds elects to exercise any such applicable termination rights or make such withdrawals,’ it said, ‘this may have an adverse effect on the financial position of the combined group.’

Lloyds is required to give at least 12 months’ notice if it chooses to terminate the contract. 

 

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