Lloyds Banking Group has agreed to sell its asset management business Scottish Widows Investment Partnership Group Limited (SWIP) to Aberdeen Asset Management for an initial consideration payable in Aberdeen shares with a value of approximately £560 million ($900 million), and a further deferred consideration, payable in cash, of up to £100 million ($160 million). As part of the transaction, Lloyds will enter into a long-term strategic asset management relationship, whereby Aberdeen will manage assets on behalf of the Group.
The sale and strategic relationship are expected to result in a stronger asset management partner for the Group and its customers, combining Aberdeen and SWIP's strengths across fixed income, real estate, active and quantitative equities, investment solutions and alternatives. SWIP's management and employees will transfer to Aberdeen upon completion.
The sale does not include Scottish Widows, Lloyd’s life, pensions and investment business, which remains core to the Group.
In consideration for SWIP, Lloyds will receive approximately 132 million new ordinary shares of Aberdeen, equivalent to approximately 9.9 per cent of its enlarged issued ordinary share capital.
Aberdeen has also committed to deliver additional consideration 12 months after completion calculated with reference to the amount by which Aberdeen's volume-weighted average share price for the five trading days prior to completion (the "VWAP") is below 420 pence but above a floor of 320 pence. To the extent the VWAP is below 320 pence, the Group has the option to terminate the sale. Based on Aberdeen's share price of 427 pence at close on 15 November 2013, the Group's shareholding in Aberdeen would have a value of approximately £560 million. In addition, further consideration of up to £100 million will be payable in cash over a five year period depending on the growth in business generated from the strategic relationship with the Group.
Lloyds intends to be a supportive shareholder and has agreed lock-up arrangements whereby, subject to certain exceptions, it will maintain its initial shareholding for at least one year, two-thirds of its initial shareholding for at least two years and one-third of its initial shareholding for at least three years. Further detail on the lock-up arrangements, which can be waived at any time by Aberdeen, is set out at the end of this announcement.
Funds under management for SWIP were £136 billion ($219 billion) at 31 August 2013. The sale is expected to complete by the end of the first quarter of 2014, subject to obtaining the necessary regulatory and other consents.