BALTIMORE - A California-based giant of global investment management agreed to acquire Baltimore's Legg Mason for $4.5 billion, the two companies announced Tuesday morning.
Franklin Templeton will pay $50 cash for each share of Legg Mason's stock, a $9.28 per share premium over Friday's closing price.
The combined firm will manage close to $1.5 trillion in assets. Legg Mason and its multiple affiliates collectively manage more than $806 million now. Franklin Templeton, based in San Mateo, California, also will assume Legg Mason's roughly $2 billion of outstanding debt.
What the deal means for Baltimore, where Legg Mason's tower of money-colored glass rises over the river in Harbor East, is unclear. The company has roughly 300 employees in the city.
Legg Mason is one of only a handful of major public companies headquartered in the city. Others include T. Rowe Price Group and Under Armour. The loss of a headquarters hurts a city's economy and charitable organizations.
The two companies said they expect to achieve $200 million in cost savings through "parent company rationalization and global distribution optimization."
The announcement comes less than a year after Legg Mason restructured and laid off 120 corporate employees, including some in Baltimore. The firm also pulled out of its longtime sports sponsorships with the Baltimore Orioles and the Baltimore Ravens.
Franklin Templeton plans to preserve the autonomy of Legg Mason's affiliates, with no changes expected to be made to those senior management teams, the companies said.
"The incredibly strong fit between our two organizations 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," Legg Mason CEO Joseph A. Sullivan said in a news release. "By preserving the autonomy of each investment organization, the combination of Legg Mason and Franklin Templeton will quickly leverage our collective strengths, while minimizing the risk of disruption."
EnTrust Global, a Legg Mason affiliate that provides alternative investment solutions, and Franklin Templeton jointly agreed that EnTrust will repurchase its business but maintain an ongoing relationship with Franklin Templeton.
Trian Fund Management L.P., which owns about 4 million shares of outstanding stock of Legg Mason, has entered into a voting agreement to support the transaction. Trian is owned by activist investor Nelson Peltz, who has been pushing for years to get more value out of Legg Mason.
Visit The Baltimore Sun at www.baltimoresun.com
The business news you need
With a weekly newsletter looking back at local history.