American asset manager Franklin Templeton has signed a definitive agreement to buy rival Legg Mason in an all-cash deal worth $4.5bn.

Upon closure in the third quarter of this year, the takeover will increase Franklin Templeton’s assets to $1.5trn.

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Transaction details

Franklin Templeton will also take on around $2bn of the debts of Legg Mason.

The merged group will trade under the name Franklin Templeton, with its global base in San Mateo, California.

However, Legg Mason’s investment affiliates will retain their autonomy. The investment philosophies, brands, and senior leadership of these affiliates will remain unchanged.

The transaction already secured the green light from the boards of the two companies. It now awaits shareholder and regulatory approvals.

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Franklin Templeton president and CEO Jenny Johnson will continue to lead the enlarged group. Its executive chairman of the board Greg Johnson will also retain his role.

Commenting on the deal, Johnson stated: “This acquisition will add differentiated capabilities to our existing investment strategies with modest overlap across multiple world-class affiliates, investment teams and distribution channels, bringing notable added leadership and strength in core fixed income, active equities and alternatives.

“We will also expand our multi-asset solutions, a key growth area for the firm amid increasing client demand for comprehensive, outcome-oriented investment solutions.”

Franklin Templeton expects the deal to add to its earnings per share from fiscal 2021.