California-based Franklin Resources (operating as Franklin Templeton) has agreed to acquire the US-based investment management firm Legg Mason in an all-cash deal worth $4.5bn.
As per the terms of the deal, the Maryland-based Legg Mason is being acquired for $50 per share, which includes nearly $2bn of its debt assumed by Franklin Resources.
The merger is expected to consolidate Franklin Templeton among the largest independent, specialised global investment managers in the world with combined assets under management (AUM) of $1.5 trillion.
Alongside its multiple investment affiliates, Legg Mason will add more than $806bn in assets, as of 31 January 2020, to the combined entity. Some of its affiliates include Brandywine Global, Clarion Partners, Martin Currie, ClearBridge Investments, Royce Investment Partners, QS Investors, and Western Asset.
As of 31 December 2019, 71% of Legg Mason’s assets under management is in the US, while the remaining 29% is domiciled in other countries.
Founded in 1899, the asset manager has more than 3,000 employees and has 39 locations across the world.
Franklin Templeton, on its own, had nearly $688bn in assets under management, as of 31 January 2020.
According to Franklin Resources, the merger will considerably deepen Franklin Templeton’s presence across important geographies, while creating an expansive investment platform.
The California-based firm said that the investment platform will have a fine balance between institutional and retail client assets under management.
Apart from that, the combined platform will create a strong separately managed account business, said Franklin Resources.
Franklin Templeton CEO comments on the acquisition of Legg Mason
Franklin Templeton president and CEO Jenny Johnson said: “This acquisition will add differentiated capabilities to our existing investment strategies with modest overlap across multiple world-class affiliates, investment teams and distribution channels, bringing notable added leadership and strength in core fixed income, active equities and alternatives.
“We will also expand our multi-asset solutions, a key growth area for the firm amid increasing client demand for comprehensive, outcome-oriented investment solutions.”
Following the completion of the acquisition, Franklin Templeton will retain the autonomy of Legg Mason’s affiliates, and their investment philosophies, processes, and brands will all be intact.
Franklin Resources said that one of the Legg Mason’s affiliates EnTrust Global will repurchase its business, which at the time of closing of the merger, will be acquired by its management.
Legg Mason chairman and CEO Joseph Sullivan said: “By preserving the autonomy of each investment organization, the combination of Legg Mason and Franklin Templeton will quickly leverage our collective strengths, while minimizing the risk of disruption.
“Our clients will benefit from a shared vision, strong client-focused cultures, distinct investment capabilities and a broad distribution footprint in this powerful combination.”
The closing of the deal is subject to receipt of regulatory approvals, Legg Mason’s shareholders’ approval, and other customary closing conditions. It is likely to occur by the end of the third quarter of this year.
