Franklin Resources Inc. is set to acquire money manager Legg Mason in a $4.5 billion deal, creating a $1.5 trillion firm.
Franklin Resources will also take on $2 billion of Legg Mason’s outstanding debt.
Jenny Johnson will continue as president and CEO at Franklin Resources, a news release from the firm Tuesday said.
The combined firm will operate as Franklin Templeton. Institutional assets under management at Franklin Templeton will account for $757 billion or 51% of total assets, compared with Franklin Resources's current $176 billion or 25% institutional business out of a total $698 billion in AUM, an investor relations presentation document by Legg Mason showed. Non-U.S. assets under management will more than double to $443 billion, up from Franklin Resources’ $217 billion in non-U.S. business.
Following completion of the deal, which is expected no later than the third quarter, Legg Mason’s multiple affiliate firms will continue to operate autonomously. The managers run $806 billion in assets. Investment philosophies, processes and brands will remain unchanged. Senior management teams of Legg Mason’s investment affiliates will not change, while the combined firm’s global headquarters will remain in San Mateo, Calif.
Legg Mason affiliate EnTrust Global, an alternative investment manager, will be repurchased by management at deal close, the release noted.
The acquisition has been approved by the boards of Franklin Resources and Legg Mason, and is subject to regulatory approvals, approval by Legg Mason shareholders and other customary closing conditions.
Investment manager Trian Fund Management, which, along with funds managed by it, owns 4.5% of Legg Mason’s outstanding stock, has entered into a voting agreement in support of the deal.
“This is a landmark acquisition for our organization 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 the board of Franklin Resources, in the release. “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 organization that is competitively positioned to serve more clients in more places.”