BALTIMORE — Legg Mason Inc. will be catapulted into the top ranks of global money managers with the June 24 announcement that it will trade its brokerage operation for Citigroup's asset management arm.
Legg Mason will have $832 billion under management, including $437 billion from Citigroup. That would make the combined firm the nation's fifth largest money manager.
The deal also will make Legg Mason's Western Asset Management Inc., Pasadena, Calif., the largest pure fixed-income manager, with $490 billion under management.
In a telephone interview on June 24, Chairman Raymond "Chip" Mason called the deal — which will make Legg Mason a pure money management company — a unique one for the group. "We've never done anything this gigantic. This is a sweeping change."
The move gives Legg Mason immediate scale in areas from mutual funds to high-net-worth separately managed accounts. It also expands the firm's geographic reach into Asia and Latin America, and boosts its client reach among central banks, financial institutions and insurers.
Legg Mason also announced it was buying The Permal Group, London, a leading European hedge fund of funds with $20 billion under management.
Investment bankers said they were amazed at the announcement of two major deals on the same day by the normally cautious Mr. Mason, but expressed confidence that the industry veteran would be able to pull them off.
"The industry has been waiting for a big, transformational deal," and this fits the bill, said Darlene DeRemer, an investment banker in Boston with Grail Partners.
It should prove a catalyst for other firms that had been sitting on the sidelines.