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Rating:Peltz Successfully Pushes the Legg Mason Share Buyback Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, May 22, 2012

Peltz Successfully Pushes the Legg Mason Share Buyback

News summary by MFWire's editors

Legg Mason's [profile] announcement about a new share-buyback program to refinance and reduce its debt is good news, but perhaps a signal of continuing commitment and even greater influence of activist investor Nelson Peltz, CEO and founding partner of Trian Fund Management, writes Beverly Goodman for Barron's.

Dan Fannon, a Jefferies & Co. analyst, told the reporter:

"There's been a fair amount of concern around Nelson Peltz and his role going forward. This implies he's on board for the near term. And it alleviates some concern for the marginal investor -- Peltz has a big stake that you probably don't want to be in front of when he exits."

Peltz said in a statement sent to Barron's:

"Legg Mason's new capital plan is a very positive development for shareholders. The company generates significant free cash flow, and it makes sense to return excess capital to shareholders. The company is also making progress in strengthening its operations, while its key investment managers continue to deliver for clients."

Mark Fetting, Legg's CEO, told Barron's:

"We feel very good about this momentum. Our recovery or turnaround is not going to be a straight line, but directionally we're seeing a lot of good momentum and as strong a pipeline as before the financial crisis."

The company's announcement included repurchasing $1.25 billion of debt held by KKR, a New York-based private equity firm, and the acceleration of $155 milion in stock repurchases.

Fetting said 65 percent of the cash that will be generated by the firm until March 2013 will be committed to the stock repurchases.

About 10.5 percent of Legg Mason's shares are owned by Trian. 

Edited by: HFD

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