Two of the UK's biggest fund managers have reached a preliminary agreement to merge in an £11bn deal that will create a global industry powerhouse.
In a statement issued on Saturday (Shenzhen: 002291.SZ - news) evening after an earlier report by Sky News, Aberdeen Asset Management (Frankfurt: 899502 - news) and Standard Life (LSE: SL.L - news) confirmed their intention to pursue one of the City's most significant deals for years.
The two Scottish companies, which collectively employ more than 9,000 people, said a merger would benefit both sets of shareholders.
"Standard Life and Aberdeen's long-term success has been built through differentiated, but complementary, strategies that have delivered attractive growth and returns for clients and shareholders.
"The potential merger represents an excellent opportunity to leverage Standard Life and Aberdeen's combined strengths to create a world-class investment company."
If completed, the combination would create the UK's biggest standalone fund manager, overseeing roughly £660bn of assets.
The deal is likely to attract close scrutiny from politicians in Scotland, amid intensifying calls from nationalists for a second independence referendum.
In their joint statement, the companies said that Standard Life shareholders would own roughly two-thirds of the combined group, which they have yet to name.
They raised the spectre of job losses by referring to potential synergies, although further details of any such ramifications are unlikely to emerge until after a deal is completed.
Aberdeen has been examining a number of other substantial transactions in recent months as it has sought to address concerns about fund outflows.
The combined Aberdeen and Standard Life will be run jointly by Martin Gilbert and Keith Skeoch, the chief executives of Aberdeen and Standard Life respectively.
Sir Gerry Grimstone, Standard Life's chairman, will chair a merged group, although it is unclear how long that would be for.
Both Aberdeen and Standard Life, which actively manages about £270bn globally, have had difficult recent periods to weather.
Aberdeen has seen funds under management decline amid deteriorating investor sentiment towards emerging markets, the company's stronghold.
It has reported 15 consecutive quarters of net withdrawals, and now manages just over £300bn of assets - down from more than £400bn at the peak.
Some analysts have predicted that Mr Gilbert - who is also a director of Sky plc (Frankfurt: 893517 - news) , the owner of Sky News - will be forced to cut Aberdeen's dividend, although when he updated the City on trading in January, he struck a positive tone.
"Investor (LSE: 0NC5.L - news) sentiment had been improving steadily in the early part of the quarter, but stalled following the US presidential election result with investors putting asset allocation decisions on hold," he said.
"Encouragingly, despite the market volatility our equity strategies produced strong returns for the year," he said at the time.
Standard Life, meanwhile, has been struggling to improve the performance of GARS, a so-called absolute return fund which aims to make money for investors in all market conditions.
GARS, which stands for Global Absolute Return Strategies, produced a negative return in 2016 even as the FTSE-100 index soared.
If Aberdeen and Standard Life complete their merger, Lloyds Banking Group - a 10% shareholder in Aberdeen - will hold a small stake in the combined group.