Franklin Resources (BEN) - Get Franklin Resources, Inc. Report reached an agreement to buy rival asset manager Legg Mason (LM) - Get Legg Mason, Inc. Report for $50 cash per share, or about $4.5 billion.
In a statement. Franklin Resources also said it would assume about $2 billion of Legg Mason’s outstanding debt.
“This is a landmark acquisition for our organization that unlocks substantial value and growth opportunities driven by greater scale, diversity and balance across investment strategies, distribution channels and geographies,” said Greg Johnson, executive chairman of Franklin Resources. “Our complementary strengths will enhance our strategic positioning and long-term growth potential, while also delivering on our goal of creating a more balanced and diversified organization that is competitively positioned to serve more clients in more places.”
Trian Fund Management, which owns about 4 million shares or 4.5% of the outstanding stock of Legg Mason, said it would support the transaction.
Trian, the activist investor, took a stake in Legg Mason last year, and Trian CEO Nelson Peltz secured a position on the board. Trian had been pushing Legg Mason to cut costs and increase revenue growth.
Legg Mason’s market value is more than $3.5 billion; it has assets under management of $800 billion. Franklin Resources has a market cap of about $12 billion and it manages nearly $700 billion.
Bloomberg, which reported the deal could be announced Tuesday, noted the merger was complementary because Legg Mason primarily focuses on retail investors, while Franklin Resources caters to institutional investors.
Franklin Resources said it expects the deal to close no later than the third quarter.
Legg Mason shares jumped 23.89% to $50.45 in trading Tuesday. Franklin Resources was rising 12% to $27.29.