On Thursday, Baltimore-based
Legg Mason, Inc.
) announced the acquisition of UK-based international equity
specialist firm Martin Currie. Financial terms of the deal were not
At the close of the transaction, which is expected in the fourth
quarter of 2014, Martin Currie, with assets under management (AUM)
worth $9.8 billion as of Jun 30, 2014, will serve as a core
independent investment partner of Legg Mason. Other existing
affiliates include Brandywine Global, ClearBridge Investments, The
Permal Group, QS Investors, Royce & Associates and Western
Moreover, the acquisition is anticipated to be accretive to Legg
Mason's earnings in the first year, reflecting management's
continuing assurance to create shareholder value. With six Martin
Currie offices in different locations, after the integration, Legg
Mason's product capabilities will be expanded in active equity
strategies including Global Equity, Global Emerging Markets, Asian
Equity, European Equity and strategies particularly focused on
Japan and China.
In accordance with Legg Mason's stratagem of creating larger
investment affiliates, as part of this transaction, Legg Mason
Australian Equities (LMAE) with $2.5 billion in AUM and a team of
14 persons will be part of Martin Currie. LMAE is an active
Australian equities manager, which offers clients strategies
including Small Cap, Property/Infrastructure, Income and Large Cap
Value. However, these strategies will be under the management of
LMAE investment teams, though it will be benefited from global
expansion of institutional business.
Having strengthened its foothold over the years in global macro and
fixed income credit, Legg Mason commands a strong presence in the
U.S. Most of the company's international business is in fixed
income. Therefore, the purchase of a non-US equity manager will
help in diversifying Legg Mason's overall line of products and is a
strategic fit for grabbing growing opportunities in equity
On the other hand, Martin Currie has a strong business in the UK.
Therefore, with the acquisition of Martin Currie, Legg Mason will
expand globally with the help of the acquired firm's asset
management brand and proficiency.
Moreover, the acquisition demonstrates Legg Mason's aim of
providing exceptional services to its clients with the purchase of
such a flourishing asset management firm. The completion of the
deal will significantly expand Legg Mason's institutional business
The deal widens Martin Currie's scope and will help its expansion
efforts with the commitment of providing best investment decisions
to its clients. Overall, the clients of Martin Currie will have
access to the industry's largest managed account platforms provided
by Legg Mason, while the company will take advantage of Martin
Currie's investment management potencies. Moreover, the integration
is providing investment and operational independence to Martin
Currie, which is beneficial for its client proposition.
The acquisitions of such asset management companies are welcome as
they play a major role in preserving investor confidence in the
We also believe that Legg Mason's diverse revenue stream and sturdy
capital position augur well for investors. Capital deployment
efforts also bode well and boost investors' confidence. Yet, the
unsettled economic environment, low interest rate and stringent
regulatory issues are matters of concern.
Legg Mason is scheduled to announce its June quarter-end results on
Jul 31. Our proven model predicted that Legg Mason may not post an
earnings beat as it did not have the right combination of two key
ingredients - positive
and a Zacks Rank #3 (Hold) or higher. It had a Zacks Rank #3
(Hold), but Earnings ESP is 0.00%.
Among other investment managers, Ameriprise Financial, Inc. (
) and Affiliated Managers Group Inc. (
) is scheduled to report June quarter-end results on Jul 29, while
Invesco Ltd. (
) on Jul 31.
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