Baltimore-based Legg Mason Inc. (LM) inked a deal to acquire New York based private asset manager QS Investors in order to expand its global investment products portfolio. The deal is expected to close by first-quarter 2015.
Legg Mason will assume QS Investors’ assets under management and assets under advisory worth $4.1 billion and $100 billion, respectively.
Though terms of the deal are yet to be disclosed, as per the deal, Legg Mason’s quantitative equity division – Batterymarch Financial Management – and its solutions unit – Legg Mason Global Asset Allocation – will gradually merge with QS Investors. The merged entity that will be recognized under QS Investors name will serve both institutional clients as well as retail investors.
Through this integration process, Legg Mason will bear restructuring costs of around $35 million. Further, excluding such costs, the company expects the acquisition to be accretive to earnings in 2015.
Dechert, LLP acted as Legg Mason’s advisor while RBC Capital Markets – an arm of Royal Bank of Canada (RY) – and Paul, Weiss, Rifkind, Wharton & Garrison LLP advised QS Investors.
QS Investors specializes in providing an array of strategies that include actively managed U.S. and Global equities, Liquid Alternatives and Customized Solutions to its global client base, and thus the deal will strongly enhance Legg Mason’s global distribution platform.
The latest deal will mark the second acquisition by Legg Mason since 2005, as back in Mar 2013, the company with its affiliate, Permal Group, acquired London-based fund-of-hedge-funds firm Fauchier Partners from BNP Paribas Investment Partners, an asset management unit of BNP Paribas SA (BNPQY).
Acquisitions of asset management companies are strategic fit for Legg Mason. Further, the company’s diversified product mix, leverage to the changing market demography, restructuring initiatives and cost-cutting measures are likely to improve its operating efficiencies in the near term.
Legg Mason currently holds a Zacks Rank #2 (Buy). Lazard Ltd. (LAZ) is a better- ranked stock in this space with a Zacks Rank #1 (Strong Buy).
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