Franklin Templeton is to buy Legg Mason – a deal that will create an asset manager with over $1 trillion of assets under management (AUM).
The purchase of Legg Mason will result in a firm with $1.5 trillion (€1.4 trillion) of AUM and will cost Franklin Resources – the company that owns Franklin Templeton - $4.5 billion, which is $50 a share.
Both firms are listed in New York and further details of the deal include Franklin Resources assuming around $2 billion of Legg Mason’s outstanding debt.
The acquisition is the second deal in the asset management industry announced this week after the UK’s Jupiter Fund Management said it would buy Merian Global Investors.
Jenny Johnson, president and chief executive of Franklin Templeton, said: “This transaction gives us significant scale, addresses strategic gaps and brings greater balance to our business, while positioning us for accelerated growth in the future.”
The deal will result in “modest overlap” that would also bring “notable added leadership and strength in core fixed income, active equities and alternatives”, Johnson said, and added: “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.”
Legg Mason manages over $806 billion in assets through a number of affiliated firms, such as ClearBridge Investments and Western Asset. Legg Mason said affiliated firms would maintain their investment autonomy.
However, one of the affiliates called EnTrust that specialises in alternative investments will be acquired by its management and go private.
Among other benefits of the deal will be the creation of “an expansive investment platform that is well balanced between institutional and retail client[s]” and also the creation of a “strong” separately managed accounts business.
Greg Johnson, executive chairman of Franklin Resources, said: “Our complementary strengths will enhance our strategic positioning and long-term growth potential, while also delivering on our goal of creating a more balanced and diversified organisation that is competitively positioned to serve more clients in more places.”
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