Aberdeen Asset Management plc Lifts On Scottish Widows Acquisition

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.

Aberdeen is the FTSE's leading riser this morning, and although short-term gains may play a part in increasing your wealth, a more pressing concern should be a permanent loss of capital. You shouldn't own shares for less than three years or more, and the best businesses have a long-term prospects.

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Mark does not own shares in Aberdeen Asset Management.