US investment management firm Franklin Templeton has confirmed plans to acquire Legg Mason in a move that will create a combined $1.5 trillion asset management unit.
Franklin Templeton said in a statement that it will pay $4.5 billion in cash and assume around $2 billion of Legg Mason’s outstanding debt to secure the deal. With Legg Mason’s $806 billion worth of assets under management, the combined entity will manage $1.5 trillion across various regions globally.
Upon closure, Legg Mason will operate under the Franklin Templeton brand, led by chief executive Jenny Johnson. Legg Mason’s affiliates will continue to operate with autonomy and no changes to senior management, with the exception of EnTrust Global which will be acquired by its management once the acquisition is finalised.
“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,” Johnson, CEO of Franklin Templeton, commented. “We will also expand our multi-asset solutions, a key growth area for the firm amid increasing client demand for comprehensive, outcome-oriented investment solutions.”
The acquisition marks the latest round of consolidation on the buy-side as active investment firms look to scale-up amid continued industry headwinds and a difficult operating environment. Earlier this week, UK investment firms Jupiter Fund Management and Merian Global Investors confirmed plans to merge to form a £65 billion active asset management institution.
At the same time just last month, Amundi beat rivals BlackRock and Candriam in its bid to acquire the €21.8 billion asset management business of Spain’s Banco Sabadell. Banco Sabadell confirmed that Amundi will fully acquire Sabadell Asset Management for €430 million cash.
“The incredibly strong fit between our two organisations gives me the utmost confidence that this transaction will create meaningful long-term benefits for our clients and provide our shareholders with a compelling valuation for their investment,” Joseph Sullivan, CEO of Legg Mason, commented on the deal. “By preserving the autonomy of each investment organisation, the combination of Legg Mason and Franklin Templeton will quickly leverage our collective strengths, while minimising the risk of disruption.”