Aberdeen Asset Management plc Lifts On Scottish Widows Acquisition

Despite a decline in new business this year, Aberdeen Asset Management plc (LON: ADN) cheers market with acquisition and cost-savings.

Mark Stones

Mark Stones (TMFMumbojumbones) joined The Motley Fool in 2014 and initially worked as a writer for Fool.co.uk, before joining the Fool’s analyst programme. Mark earned a BA in English from Loughborough University. Although he spends more time reading annual reports than Russian literature these days, he still appreciates a novelist’s antipathy toward the accepted view, which is a useful attitude when trying to sniff out hidden gems on the stock market. His approach to investing has been largely influenced by the principles of Warren Buffett and Peter Lynch. He also takes a special interest in the work of healthcare companies. Outside of investing, Mark plays guitar, enjoys good writing and has a guilty passion for combat sports.

Published 1 April, 2014 11:06 am BST

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

The shares of Aberdeen Asset Management (LSE: ADN) added 22p, or 6%, to 412p during early trade this morning after the firm announced “significant” cost savings on £3.9bn in net outflows for January and February.

Aberdeen, which has one of the most popular emerging markets funds, has suffered particularly badly as conditions in emerging markets weaken.

The company gained £4bn in new business in the first two months in 2014, bringing the total to £10.8bn for the first five months of its fiscal year, against £20.3bn in 2012.

Investors were cheered, however, by the announcement that Aberdeen completed its acquisition of Scottish Widows Investment Partnership for £550m.

Aberdeen’s chief executive, Martin Gilbert, commented on the acquisition:

“We are pleased to have completed this important acquisition as planned and on schedule, so that we can now commence the task of integrating SWIP into the enlarged Aberdeen Asset Management Group. We will immediately begin a structured migration of funds and platforms, whilst continuing to deliver an excellent investment performance for both existing and new clients.

“We look forward to developing our new strategic relationship with Lloyds and, on behalf of everyone at Aberdeen, I would like to welcome our new colleagues from SWIP into the Group.”

Based on the projections of City experts, Aberdeen will reveal earnings of 33p per share in its final 2014 results, meaning the shares may trade on a P/E of 12. A forecast dividend of 18p is covered 1.8 times by earnings.

Of course, if or not you’d like to ‘buy’ — based on those ratings, today’s results and the potential for further emerging market headwinds — is solely your decision.