Franklin Templeton is to acquire Legg Mason in an all-cash deal of US$4.5 billion ($6.7 billion) to create a combined $1.5 trillion asset manager.
Legg Mason and its affiliates such as Western Asset had $806 billion in assets.
Franklin Templeton said the acquisition would ‘significantly deepen’ the firm’s presence in key geographies and create an investment platform which was ‘balanced between institutional and retail’. It would also create a strong separately managed account business.
Autonomy of Legg Mason’s affiliates would be preserved and the acquisition was expected to result in $200 million in annual cost savings.
There would be no change to Legg Mason senior management and the combined firm would operate as Franklin Templeton.
Jenny Johnson, president and chief executive of Franklin Templeton, 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.”
Joseph A. Sullivan, chairman and chief executive of Legg Mason, said, “The incredibly strong fit between our two organisations gives me the utmost confidence that this transaction will create meaningful long-term benefits for our clients and provide our shareholders with a compelling valuation for their investment.
“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.”