By Ross Kerber and Tanya Agrawal
March 4 Asset manager Legg Mason Inc said
it will buy privately held QS Investors and merge it with two
other business units, aiming to build sales to institutional
clients and retail investors.
The deal announced on Tuesday marks an early expansion step
by Legg Mason Chief Executive officer Joseph Sullivan, who took
over last year and said he would consider acquisitions as a way
to grow the Baltimore fund company.
The deal, Sullivan said on a conference call with analysts,
"is entirely in keeping with what I have said many times, namely
that we intend to have fewer and larger affiliates to brand and
With $680 billion under management at the end of January
Legg Mason is one of the largest fund firms, but has struggled
to end withdrawals of cash by investors since the financial
New York-based QS Investors has $4.1 billion assets under
management and about $100 billion in assets under advisory, Legg
Mason said in a statement.
Legg Mason said the deal will result in restructuring costs
of about $35 million and will add to earnings in 2015. Other
terms of the deal, which is expected to close in the first
fiscal quarter of 2015, were not disclosed.
Sullivan said the deal will have no impact on Legg Mason's
ability to buy back shares.
The agreement will result in an unspecified number of
layoffs, Legg Mason spokeswoman Mary Athridge said, as two other
Legg Mason businesses, Batterymarch Financial Management and
Legg Mason Global Asset Allocation, are combined with QS
QS Investors mainly serves institutional clients, but
Sullivan said he hopes to make some of its strategies available
to retail investors as well. The unit will eventually have a
management equity plan in place, he said, as Sullivan is moving
to create at other Legg Mason units.
QS Investors was once a unit of Deutsche Bank AG and was
spun out in 2010. The firm's chief executive, Janet Campagna,
said on the conference call the deal would help in areas like
sales. "We needed a strong global distribution partner," she
Shares in Legg Mason were up 3 percent to $46.54, in line
with other fund companies.