Franklin Resources, a global investment management organisation operating as Franklin Templeton, has entered into a definitive agreement to acquire Legg Mason for $50.00 per share of common stock in an all-cash transaction.
The company will also assume approximately $2bn of Legg Mason's outstanding debt.
The acquisition of Legg Mason will create $1.5trn in assets under management (AuM) across one of the broadest ranges of high-quality investment teams in the industry.
The combined footprint of the organisation 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 AUM. In addition, the combined platform creates a strong separately managed account business.
The all-cash consideration of $4.5bn will be funded from the Company's existing balance sheet cash. Franklin Templeton will also assume approximately $2bn in Legg Mason's outstanding debt. Upon closing of the transaction, Franklin Templeton expects to maintain a robust balance sheet and considerable financial flexibility with pro forma gross debt of approximately $2.7bn with remaining cash and investments of approximately $5.3bn.
This transaction is expected to generate upper twenties percentage GAAP EPS accretion in Fiscal 2021 (based on street consensus earnings estimates for each company), excluding one-time charges, non-recurring and acquisition related expenses.
It has been unanimously approved by the boards of Franklin Resources and Legg Mason. This transaction is subject to customary closing conditions, including receipt of applicable regulatory approvals and approval by Legg Mason's shareholders, and is expected to close no later than the third calendar quarter of 2020.
With this acquisition, Franklin Templeton will preserve the autonomy of Legg Mason's affiliates, ensuring that their investment philosophies, processes and brands remain unchanged. As with any acquisition, the pending integration of Legg Mason's parent company into Franklin Templeton's, including the global distribution operations at the parent company level, will take time and only commence after careful and deliberate consideration.
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. 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.
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.
This article was first published by InvestmentEurope, International Investment's sister title