Franklin Resources, Inc. has entered into a definitive agreement to acquire Legg Mason, Inc. in a $4.5 billion deal.
The deal—rumors of which were reported early this morning by The Wall Street Journal and Bloomberg News—will be for $50.00 per share of common stock in an all-cash transaction, with Franklin also assuming approximately $2 billion of Legg Mason’s outstanding debt. The all-cash consideration of $4.5 billion will be funded from the company’s existing balance sheet cash.
According to a press release, the acquisition of Legg Mason and its multiple investment affiliates (which include Brandywine Global, Clarion Partners, ClearBridge Investments, Martin Currie, QS Investors, Royce Investment Partners and Western Asset) collectively manage over $806 billion in assets as of Jan. 31, 2020, and will result in an organization with a combined $1.5 trillion in assets under management (AUM).
The combined footprint of the organization will deepen Franklin Templeton’s presence in key geographies, create an expansive investment platform balanced between institutional and retail client AUM, and create a “strong separately managed account business.”
The press release notes that with this acquisition, Franklin Templeton will preserve the autonomy of Legg Mason’s affiliates, ensuring that their investment philosophies, processes and brands remain unchanged. It also notes that, as with any acquisition, the pending integration of Legg Mason’s parent company into Franklin Templeton’s, including the global distribution operations at the parent company level, will take time and only commence after careful and deliberate consideration.
Following the closing of the transaction, Jenny Johnson will continue to serve as president and CEO, and Greg Johnson will continue to serve as executive chairman of the Board of Franklin Resources, Inc. There will be no changes to the senior management teams of Legg Mason’s investment affiliates. Global headquarters will remain in San Mateo, CA and the combined firm will operate as Franklin Templeton.
Jenny Johnson, president and CEO 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. 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. Legg Mason’s investment affiliates will be able to leverage Franklin Templeton’s global infrastructure and ongoing investment in technology and innovation, while clients can take comfort in the combined firm’s financial strength and aligned interests.”
After careful consideration, EnTrust Global, a Legg Mason affiliate that provides alternative investment solutions, and Franklin Templeton, jointly agreed that it was in their best interest that EnTrust repurchase its business, which will be acquired by its management at closing. EnTrust will maintain an ongoing relationship with Franklin Templeton.
