and Legg Mason's
deal to swap asset management for brokerage is final, the companies announced
The deal gives Legg Mason $830 billion in total assets under management, making the Baltimore, Maryland-based manager the the fifth largest U.S. fund manager and fifth largest U.S. asset manager.
Legg Mason will acquire $437 billion in assets under management from Citi's asset management business. Legg Mason also announced it will acquire fund-of-hedge fund manager, the Permal Group
, from Sequana Capital and executives at the Permal Group. The Permal Group manages $20 billion in assets.
In exchange, Citigroup will gain Legg Mason's private client brokerage and capital makets business, as well as $1.5 billion in common and convertible shares of Legg Mason stock, a $550 million loan.
Legg Mason and Citigroup also agreed to a three-year distribution deal where Legg Mason will have access to Citigroup's Smith Barney broker force, Citigroup Private Bank, Citibank branches, Citigroup's Primerica life insurance and variable annuity sales representatives, and CitiStreet.
"Citigroup will continue to offer its clients Asset Managementís products and in addition, inherit Legg Mason Wood Walkerís position as the primary domestic provider of Legg Masonís equity fund family, including the top performing equity funds of Legg Mason Capital Management Inc. managed by Bill Miller," stated Citigroup officials in a press release.
Legg Mason's chairman and chief executive officer, Raymond "Chip" Mason said the deal would expand Legg Mason's geographic reach to Japan, Hong Kong, Australia and Latin America.
"Another attractive aspect of this transaction is the strategic fit between Western Asset, our leading fixed income manager, and CAM's fixed income buisness. We believe there are opportunities to generate substantial strategic and economic benefits by combining CAM's fixed income business with Western Asset's," said Mason.
Post-deal, Legg Mason's Western Asset Management will manage approximately $490 billion in fixed income assets.
Legg Mason's acquisition of Permal will cost another $800 million for an 80 percent interest, with the right to purchase the remaining 20 percent within four years.
Permal serves high-net worth investors in Asia, South America, Europe and the Middle East. The management of the fund manager will remain intact.
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