“Aberdeen, hurt by weaker sentiment toward emerging markets, has suffered more than three years of redemptions, leading CEO Martin Gilbert to freeze salaries and cut costs,” Bloomberg reported on Monday. “Standard Life's investment unit also had outflows last year.”

Bloomberg quoted a note to clients from analyst Paul McGinnis at Shore Capital Group Ltd., who wrote that Aberdeen shareholders have no choice but to “accept a nil-premium takeover or risk a material dividend cut, possibly as soon as the interim results in May, due to the weak capital situation. The uncertainty created by an offer and subsequent integration period could be unhelpful in attracting new money from clients.”

EDINBURGH—Contained within the fund manager that would be created by the proposed merger of Standard Life and Aberdeen Asset Management is a real estate powerhouse. Announced Monday, the all-stock combination would result in a financial services giant with about US$800 billion in assets under management, of which about US$42 billion would be comprised of real estate AUM.

PERE reported Monday that the combined company would be Europe's second largest fund manager, as well as the largest in the UK, and would be one of the largest core property investors in the region. Between them, Aberdeen and Standard Life have about US$6.25 billion invested through core open-ended funds.

“The combination of our businesses will create a formidable player in the active asset management industry globally,” says Keith Skeoch, chief executive of Standard Life. “We strongly believe that we can build on the strength of the existing Standard Life business by combining with Aberdeen to create one of the largest active investment managers in the world and deliver significant value for all of our stakeholders.”

Whether the new business' scale will be a sufficient bulwark against competitors remains to be seen. Published reports in the Wall Street Journal, Bloomberg Business and the London Daily Telegraph all made the point that Aberdeen and Standard Life both have come up against lower-cost passive fund manager.

“Aberdeen, hurt by weaker sentiment toward emerging markets, has suffered more than three years of redemptions, leading CEO Martin Gilbert to freeze salaries and cut costs,” Bloomberg reported on Monday. “Standard Life's investment unit also had outflows last year.”

Bloomberg quoted a note to clients from analyst Paul McGinnis at Shore Capital Group Ltd., who wrote that Aberdeen shareholders have no choice but to “accept a nil-premium takeover or risk a material dividend cut, possibly as soon as the interim results in May, due to the weak capital situation. The uncertainty created by an offer and subsequent integration period could be unhelpful in attracting new money from clients.”