Franklin Tem­ple­ton ac­quires Baltimore’s Legg Mason

Baltimore Sun - - SPORTS - By Lor­raine Mirabella

Franklin Tem­ple­ton com­pleted its planned pur­chase of Baltimore-based Legg Mason Fri­day in a $4.5 bil­lion deal that cre­ates one of the world’s largest global in­vest­ment man­agers but means a loss of jobs and of an­other cor­po­rate head­quar­ters for the city.

Franklin, a Cal­i­for­nia-based mu­tual fund gi­ant, paid $50 per share of Legg Mason com­mon stock in an all-cash trans­ac­tion and as­sumed about $2 bil­lion of Legg Mason’s out­stand­ing debt.

Franklin Tem­ple­ton’s head­quar­ters will re­main in San Ma­teo, Cal­i­for­nia, and the firm will keep a smaller pres­ence in Baltimore, where Legg has had about 250 em­ploy­ees based in a decade-old tower in Har­bor East.

The Baltimore-based in­vest­ment man­ager agreed to be ac­quired by Franklin Tem­ple­ton in Fe­bru­ary.

The loss of Legg Mason, founded in the city 121 years ago, fol­lows de­par­tures over the years of other head­quar­ters, in­clud­ing Con­stel­la­tion En­ergy Group, Black & Decker, USF&G, Alex. Brown & Sons and Mary­land Na­tional Bank. And it weak­ens the city’s foothold as a re­gional fi­nan­cial hub.

The com­bined work­force will be trimmed by about 8% glob­ally, in­clud­ing some lay­offs that oc­curred over the past two months, said Matthew Walsh, a Franklin spokesman. Legg Mason has about 3,000 em­ploy­ees world­wide, many in of­fices in New York, Con­necti­cut and Cal­i­for­nia.

Be­sides some job loss, “the big­ger is­sues is the loss of an­other head­quar­ters com­pany,” said Karyl Leg­gio, a fi­nance pro­fes­sor at Loy­ola Univer­sity Mary­land. “It’s a sad day for Baltimore to lose an­other head­quar­ters.”

It will likely mean less sup­port in the city for non­prof­its and foun­da­tions that Legg Mason sup­ported, while a branch of­fice may not have the same ap­peal as a head­quar­ters in at­tract­ing work­ers.

Franklin made cuts to the work­force af­ter re­view­ing cor­po­rate func­tions of both firms and iden­ti­fy­ing over­lap, Walsh said. He did not say how many lay­offs have oc­curred or are planned in Baltimore.

“Our or­ga­ni­za­tion has been suc­cess­ful in hav­ing teams op­er­at­ing across our global lo­ca­tions, and we will con­tinue to take that ap­proach,” Walsh said.

The ad­di­tion of the $806 bil­lion man­aged by Legg Mason and its af­fil­i­ates will al­low Franklin to more than dou­ble to $1.4 tril­lion in as­sets un­der man­age­ment.

The ac­qui­si­tion was com­pleted by Franklin Re­sources, which op­er­ates through sub­sidiaries as Franklin Tem­ple­ton in more than 165 coun­tries and is best known for its con­sumer-ori­ented mu­tual fund busi­ness.

Legg, founded in 1899 as George Mack­u­bin & Co. on Red­wood Street down­town, sur­vived the Great De­pres­sion and the hous­ing and fi­nan­cial cri­sis that led to the last re­ces­sion.

The firm grew through ac­qui­si­tions and merg­ers and took on the name Legg Mason in 1970.

The ac­qui­si­tion is the big­gest ever for Franklin.

“A tremen­dous amount has hap­pened since we made our an­nounce­ment in mid-Fe­bru­ary, but the strate­gic ra­tio­nale for this pow­er­ful com­bi­na­tion has only strength­ened,” Jenny John­son, Franklin Tem­ple­ton’s pres­i­dent and CEO, said in an an­nounce­ment late Fri­day. “This ac­qui­si­tion un­locks sub­stan­tial value and growth op­por­tu­ni­ties driven by greater scale, diver­sity and bal­ance across in­vest­ment strate­gies, dis­tri­bu­tion chan­nels and ge­ogra­phies.”

Trad­ing in shares of Legg Mason com­mon stock was sus­pended at the close of busi­ness Fri­day and the stock was delisted from the New York Stock Ex­change.

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