Nov 9 Money manager Legg Mason Inc might
be better off staying intact, after all.
Some in the industry lately have suggested that selling or
spinning off investment units like Legg's Western Asset
Management bond division could get the Baltimore fund company's
share price out of the doldrums. At $25.02 on Friday, the shares
trade at less than one-quarter of the level they fetched before
the financial crisis.
But one well-known analyst doubts a break up would do much
to boost shareholder value. Selling or spinning off Western
would require a complex and difficult process that might only
boost Legg Mason's share price to about $29, William Katz, a
Citigroup analyst, wrote in a report on Friday.
"Given execution risk and time leakage, the pro forma upside
may not be enough to attract investors," Katz wrote. He added
that his analysis was "further washing away the lingering bull
thesis around major break up."
Katz was not available for an interview, a Citigroup
Legg Mason spokeswoman Mary Athridge declined to comment.
The company's Chief Financial Officer Peter Nachtwey is
scheduled to speak at an investment conference on Nov. 13.
Katz's analysis comes at a dicey time for Legg Mason, which
is searching for a new chief executive after its previous head
Mark Fetting stepped down last month.
Complicating matters, activist investor Nelson Peltz sits on
the company's board and controls just under 10 percent of the
company's shares. He has not said what he plans to do after
limits on his ownership end on November 15.
With about $460 billion in assets under management, Western
is by far the largest piece of Legg Mason's $651 billion in
total assets. Other units include its ClearBridge Advisors
equity unit, with $59 billion under management, and its
Brandywine Global equity and bonds shop, with $41.4 billion.
Western generates $760 million in annual revenue and so
would be worth around $1.5 billion, Katz estimated in his