(Reuters) – Aberdeen Asset Management (ADN.L) is to buy Lloyds’ (LLOY.L) fund management arm Scottish Widows for about 660 million pounds, creating Europe’s No. 1 listed stand-alone fund manager.

Aberdeen will pay with shares worth 560 million pounds, or 9.9 percent of the company, and 100 million in cash over five years depending on how well it manages various Lloyds assets.

Lloyds has agreed not to sell any of its stake for a year.

The deal raises Aberdeen’s assets under management by more than two thirds to 336 billion pounds, knocking Schroders (SDR.L) into second place and offering it diversification into fixed income and property, where Scottish Widows is stronger.

Aberdeen chief executive Martin Gilbert, who stressed in April that a bid for Scottish Widows was highly unlikely, said that adding its Solutions business, offering wealth management products to Lloyds’ customers, had clinched the deal.

http://uk.reuters.com/article/2013/11/18/uk-lloydsbanking-idUKBRE9AH0FG20131118