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Legg Mason Prices Junior Subordinated Notes Worth $250M

On Monday, Legg Mason Inc.LM announced the pricing of underwritten public offering of Junior Subordinated Notes worth $250 million. Legg Mason sold the notes at a fixed interest rate of 6.375% and at a 100% par price.

The notes will mature in 2056. The interest will be paid quarterly, with the first payment due on Jun 15, 2016. The offering is anticipated to close on Mar 14, 2016, though it awaits certain customary closing conditions.

J.P. Morgan Securities LLC, a division of JPMorgan Chase & Co. JPM , Wells Fargo Securities, LLC, a division of Wells Fargo & Company WFC and Morgan Stanley & Co. LLC, a unit of Morgan Stanley MS are among the joint book-running managers for the offering.

The proceeds from the offering along with other financing proceeds are intended to be used for acquisitions of Clarion Partners and EnTrust Capital along with fees and expenses associated with these deals. However, on non-completion of these transactions, the proceeds will be used for general corporate purposes.

Our Viewpoint

The sale of notes will provide the company some financial flexibility at this point. Legg Mason's continued strengthening of balance sheet, with focus on risk and expense management, should propel its earnings ahead.

We believe that the company's latest acquisition spree would be accretive to its revenue. Legg Mason has the potential to outperform its peers in the long run, given its diversified product mix, strategic acquisitions and leverage to the changing market demography. However, several issues including regulatory headwinds keep us apprehensive.

Legg Mason currently carries a Zacks Rank #3 (Hold).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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