M and A
Investors Give Green Light To Franklin Resources' Legg Mason Deal
The M&A deal, one of the largest in US asset management industry history, underscores how the battle for economies of scale in this business remain intense.
Shareholders of US-listed asset management house Legg Mason have voted to approve proposals to merge the business with rival Franklin Resources. Legg Mason has combined asset under management of $763 billion.
Franklin Resources said on May 11 that it had assets under management of $599.4 billion as at April 3 this year.
Originally announced in mid-February, Franklin Resources agreed to acquire Legg Mason for $50.00 per share of common stock in an all-cash transaction. Franklin will also assume approximately $2 billion of Legg Mason's outstanding debt as part of the transaction. In February, the deal had been valued at almost $4.5 billion.
Franklin Resources is the parent of Fiduciary Trust Company International, the wealth management organization which itself has made a number of acquisitions.
At a time when regulatory costs and the rise of low-cost tracker funds such as exchange traded funds have squeezed margins, there’s a battle for economies of scale in the sector, which the disruptions caused by COVID-19 may arguably accelerate.
“The acquisition of Legg Mason and its multiple investment affiliates, which collectively manage over $763 billion as of April 30, 2020, will establish Franklin Templeton as one of the world's largest independent, specialized global investment managers,” the statement said.
“The combined footprint of the organization will significantly deepen Franklin Templeton's presence in key geographies and create an expansive investment platform that is well balanced between institutional and retail client assets under management,” it said.
Subject to regulatory approval and other closing conditions, the companies expect the merger to close in the third quarter of this year, a statement from Legg Mason on May 15 said.
Earlier in May, Franklin Resources said it had acquired AdvisorEngine, a digital wealth platform and provider of technology and consulting services to more than 1,200 financial advisory firms in the US that manage over $600 billion in assets.
