US asset manager Franklin Templeton is to buy Legg Mason for $50 (€46) per share of common stock in an all-cash transaction, forming an asset manager with combined assets under management worth $1.5trn.
The all-cash consideration of $4.5bn will be funded from Franklin Templeton’s existing balance sheet cash, it said. Franklin Templeton is also to assume around $2bn of Legg Mason’s outstanding debt, taking the price tag to $6.5bn.
Franklin Templeton said it would preserve the autonomy of Legg Mason’s affiliates – such as Brandywine Global, Clarion Partners, and ClearBridge Investments – ensuring that their investment processes and brands remain unchanged. Collectively the affiliates manage approximately $806bn in assets, as of 31 January.
Greg Johnson, executive chair of the board of Franklin Resources, said: “This is a landmark acquisition for our organisation that unlocks substantial value and growth opportunities driven by greater scale, diversity and balance across investment strategies, distribution channels and geographies.”
Jenny Johnson, president and chief executive officer of Franklin Templeton, said the firm was also looking to expand its multi-asset solutions, “a key growth area for the firm amid increasing client demand for comprehensive, outcome-oriented investment solutions”.
Joseph Sullivan, chair and CEO of Legg Mason, added that by “preserving the autonomy of each investment organisation, the combination of Legg Mason and Franklin Templeton will quickly leverage our collective strengths, while minimising the risk of disruption”.
There are to be no changes to the senior management teams of Legg Mason’s investment affiliates following the closing of the transaction. Jenny Johnson will continue to serve as president and CEO, and Greg Johnson will continue as executive chairman of the board of Franklin Resources.
Global headquarters will remain in San Mateo, CA, and the combined firm will operate as Franklin Templeton.
One Legg Mason affiliate will not form part of the enlarged group. EnTrust Global, which provides alternative investment solutions, will once again become a private company, with the business to be acquired by its management at closing of the Legg Mason acquisition.
EnTrust will maintain an ongoing relationship with Franklin Templeton.
In the UK, Jupiter Fund Management yesterday announced it was poised to acquire Merian Global Investors.