Franklin Resources to buy rival Legg Mason to create a US$1.5 trillion asset management group

Franklin Resources is buying competitor Legg Mason for US$4.5 billion, creating a financial company with a combined US$1.5 trillion in assets under management.

Franklin Resources Inc, which operates as Franklin Templeton, said Tuesday that it would pay US$50 for each Legg Mason Inc share and also assume about US$2 billion in outstanding debt.

Bloomberg reported earlier on Tuesday of the potential all-cash deal at 23 per cent premium to Legg Mason’s stock closing price on Friday. The deal strengthens Templeton’s presence in key geographies and creates an investment platform that is well balanced between institutional and retail client assets under management. The deal is expected to close no later than 2020’s third quarter.

Nelson Peltz’s Trian Fund Management LP and funds managed by it own about 4.5 per cent of Legg Mason’s outstanding stock and have entered into a voting agreement in support of the transaction. Shares of Legg Mason jumped more than 20 per cent in New York before the opening bell.

The combination comes as active money managers face unprecedented pressures on fees and have been trimming staff to control costs, forcing industry players to consolidate. Jupiter Fund Management Plc agreed to acquire rival UK asset manager Merian Global Investors on Monday.

Reporting by AP, Bloomberg