Legg Mason Scales Up

Money manager Legg Mason (LM Quote) saw its net income skyrocket in the third quarter primarily due to a $643.4 million gain from the December sale of its brokerage unit to Citigroup (C Quote) in exchange for Citi's asset management business.

Baltimore-based Legg Mason said earnings rose to $760.3 million, or $5.80 a share, in the quarter ended Dec. 31, from $112.7 million, or 98 cents a share, last year.

The Thomson First Call consensus estimate was for the company to earn $1.03 a share, but that figure doesn't take into account the $3.7 billion asset swap.

The company said income from continuing operations, or it's so-called "legacy business," totaled $100.8 million, up 28% from $79.0 million a year ago, including $24.6 million of costs related to the Citigroup transaction.

Assets under management rose to $850.8 billion, of which $430.7 billion was attributable to Legg Mason's legacy operation and $400.8 billion to Citigroup Asset Management. A separate acquisition of Permal contributed $19.3 billion to the total.

"December was clearly a landmark quarter for Legg Mason. The acquisitions of the Citigroup Asset Management and Permal businesses enabled us to virtually double our assets under management while substantially increasing our global footprint," said Raymond A. "Chip" Mason, Legg's chairman and CEO.

Mason added that Legg's assets managed for non-U.S. clients now exceed $265 billion, or 31% of the firm's total assets under management.

"As a result, we are now a much larger and broader, pure asset management company," said Mason. "The divestiture of our brokerage business, while certainly difficult on a personal level, enables us to focus solely on making Legg Mason, now one of the largest asset managers in the world, hopefully one of the most highly regarded asset managers in the world."