MORE CONSOLIDATION: Franklin Resources Signs Deal to Buy Legg Mason
Posted on 02/18/2020
Franklin Resources, Inc., a global investment management organization operating as Franklin Templeton, announced that it has entered into a definitive agreement to acquire Legg Mason, Inc. for US$ 50.00 per share of common stock in an all-cash transaction at US$ 4.5 billion. Franklin Resources will also assume approximately US$ 2 billion of Legg Mason’s outstanding debt. The acquisition of Legg Mason and its multiple investment affiliates, which collectively manage over US$ 806 billion in assets as of January 31, 2020, will establish Franklin Templeton to have a combined US$ 1.5 trillion in assets under management (AUM). Franklin Resources will have access to more brands from this Legg Mason deal including fixed income shop Western Asset Management, Royce & Associates, LLC, Brandywine Asset Management, LLC, QS Investors, Martin Currie (Holdings) Ltd, and ClearBridge Investments.
The deal is supported by CEO Nelson Peltz of Trian Fund Management, L.P., a board member and shareholder of Legg Mason. Trian Fund Management, L.P. and funds managed by it, which collectively own approximately 4 million shares or 4.5% of the outstanding stock of Legg Mason, have entered into a voting agreement in support of the transaction.
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.
Bye to EnTrust
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.
More Details
These are expected to result in approximately US$ 200 million in annual cost savings, net of significant growth investments Franklin Templeton expects to make in the combined business and in addition to Legg Mason’s previously announced cost savings. Legg Mason operates out of Baltimore, which could lose out due to this deal.
The deal is expected to close no later than the third calendar quarter of 2020.
Mason & Co. by Legg & Co. merged in 1970 to form Legg Mason. Legg Mason acquired Western Asset Management in 1986.
Advisors
Broadhaven Capital Partners, LLC and Morgan Stanley & Co LLC served as financial advisors to Franklin Resources, Inc. Ardea Partners LP also provided advice. Willkie Farr & Gallagher LLP acted as external legal counsel.
PJT Partners served as the lead financial advisor to Legg Mason. J.P. Morgan Securities LLC also served as financial advisor to Legg Mason. Weil, Gotshal & Manges LLP served as lead counsel to Legg Mason and Skadden, Arps, Slate, Meagher & Flom LLP served as special counsel to Legg Mason.
Dechert LLP served as legal counsel to EnTrust Global.
