ABERDEEN Asset Management's stock market worth soared by about £750 million as the City lauded its deal to buy Scottish Widows Investment Partnership - which will almost certainly see it overtake Schroders to become Europe's largest listed independent fund manager.

Aberdeen said it was paying about £550m in shares to buy Edinburgh-based SWIP from Lloyds Banking Group. A further deferred consideration of up to £100m will be payable in cash over a five-year period - as part of the deal announced yesterday - depending on the performance of a strategic asset management alliance being formed between Aberdeen and taxpayer-backed Lloyds.

This alliance will include the sale of Aberdeen investment products through the branch network of Bank of Scotland owner Lloyds, which is retaining life and pensions business Scottish Widows.

The Herald revealed on Saturday that Aberdeen was poised to unveil a takeover of SWIP as early as yesterday for between £500m and £600m in shares, having seen off competition from rival bidder Macquarie, the Australian investment bank.

Aberdeen said yesterday that it had £200.4 billion of funds under management at September 30, up 7% on a year earlier. It declared that the SWIP operations being acquired would add about £136bn of assets under management, with annualised revenues of approximately £234m.

Shares in Aberdeen leapt 62.9p or 14.7% to 489.7p yesterday, increasing the investment house's stock market worth from £5.1bn to nearly £5.9bn.

The reference price for the deal, which will give Lloyds a 9.9% stake in Aberdeen, is 420p-a-share, and this is the figure on which the £550m valuation is based. Aberdeen will have to pay additional consideration, on top of the 131.8 million new shares being issued to Lloyds to buy SWIP, if its weighted-average share price is below 420p in the five trading days before completion of the acquisition, expected by the end of the first quarter of 2014.

Aberdeen chief executive Martin Gilbert was in ebullient form as his investment house unveiled its latest major acquisition, describing the share-price reaction as " great".

He added: "It is not often you do anything that gets that kind of reaction. It is fantastic ... I knew it would be well-received. It is a great deal."

The acquisition will see the management and employees of SWIP move to Aberdeen. SWIP employs about 500 people in total, the bulk of them in Edinburgh and others in London and New York. Aberdeen, which has a big fund management base in London, has about 2200 staff.

Asked about any plans for job cuts following the takeover, Mr Gilbert replied: "This is based on growing the businesses going forward. This isn't prefaced on cost-cutting."

But he added that Aberdeen would "obviously have a look" where there was duplication of operations.

Owen Kelly, chief executive of industry body Scottish Financial Enterprise, paid tribute to Aberdeen after hearing news of the deal.

He said: "The acquisition of SWIP and the formation of a strategic partnership with Lloyds reflects the strength and success of Aberdeen as a leading global asset manager.

"It is a ringing endorsement of Scotland and the UK as an international financial centre, with over half of the group's assets to be managed from Edinburgh and a quarter of Aberdeen's global workforce based in Scotland."

Mr Kelly added: "Since its creation in 1983 by three people, including CEO Martin Gilbert, Aberdeen has grown steadily to become a market leader ... this deal brings about the formation of the largest independent asset manager in Europe, which chimes with the strong performance we are seeing across the asset management sector in Scotland."

Aberdeen has enjoyed a remarkable turnaround, after it was laid low by the split-capital investment trust crisis in the early years of the millennium.

The investment house has grown in recent times into the second-largest independent listed fund manager in Europe behind Schroders, which said earlier this month that it had assets under management of £256.7bn at the end of September.

Aberdeen yesterday announced a 39% rise in underlying pre-tax profits to £482.7m in the year to September 30. It declared a final dividend of 10p-a-share. This will take the total payout to 16p-a-share, up 39% on the payout for the prior 12 months.

Lloyds said that, based on Aberdeen's closing share price of 427p on Friday, and assuming only the initial consideration was received, the sale of SWIP was expected to lead to a post-tax gain on disposal of approximately £190m.

It added that it intended to be a "supportive shareholder" in Aberdeen and had agreed lock-up arrangements whereby, subject to certain exceptions, it would maintain its initial shareholding for at least one year, two-thirds of its initial holding for at least two years and one-third of its initial stake for at least three years.

These lock-up arrangements can be waived at any time by Aberdeen.