Franklin Templeton set to buy Legg Mason in $4.5bn deal
Franklin Templeton is set to acquire rival asset manager Legg Mason in the latest sign of consolidation in the asset management industry.
The investment manager announced that it had entered into an agreement to acquire Legg Mason for $50 per share in an all-cash transaction of $4.5bn. It will also assume $2bn of outstanding debt.
The combined business will manage more than $1.5tn in assets and become one of the largest asset managers in the world.
Franklin Templeton boss Jenny Johnson will remain as president and chief executive, and there will be no changes to the senior management teams of Legg Mason’s affiliates.
Johnson 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.”
“We have incredible respect and admiration for the success Legg Mason and its investment affiliates have achieved and we have structured the transaction to ensure that its affiliates have the right mix of independence and support to continue building on their strong track records.”
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Legg Mason, which manages $806bn, operates nine investment managers that do business under separate brands. The current transaction is intended to preserve the autonomy of its affiliates.
“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,” said Greg Johnson, executive chairman of Franklin’s board.
It is the latest move in a series of deals by active asset managers scaling up in order to fend off threats to their business models.
Yesterday, Jupiter Fund Management confirmed it had clinched a £370m deal to buy Merian Global Investors, which some analysts branded “defensive”.
The acquisition means Jupiter will become the world’s second largest retail funds manager.
Janus Capital and Henderson Global Investors and Standard Life Investments and Aberdeen Asset Management were among the first groups to band together and scale up.
Shares in Franklin Resources were up more than 14 per cent in pre-trading. Legg Mason shares soared nearly 24 per cent.