January 16, 2013 / 3:40 PM / 5 years ago

UPDATE 1-Legg Mason merging Bill Miller's unit with ClearBridge

Jan 16 (Reuters) - Asset manager Legg Mason Inc said on Wednesday it will merge its Legg Mason Capital Management (LMCM) unit, the longtime home of well-known fund manager Bill Miller, with the company’s ClearBridge Investments unit.

Miller, who famously beat the S&P 500 index for 15 years, last year gave up the management of his best-known fund, Value Trust, after a string of sub-par results. LMCM’s Baltimore-based team will continue to be led by Sam Peters.

Legg Mason spokeswoman Mary Athridge said there will be layoffs stemming from the merger but declined to give more details. Executives were not available to be interviewed, she said.

The reorganization is the latest change at Legg Mason, the fourth-largest publicly-traded U.S. asset manager. The company has been searching for a new chief executive since Mark Fetting stepped down from the post in October, and it has struggled to turn around outflows from many of its largest funds.

Last week, Reuters reported that the company had been approached by senior managers and private equity firms with plans to take it private, but its board decided against exploring that option at least until its CEO search is completed.

Legg Mason reported assets of $648 billion at Dec. 31. The majority of its assets are at its Western Asset Management bond division, with $459 billion under management in September. ClearBridge ranked second with $59 billion at the time. LMCM had $7 billion under management at the end of September.

Peters and his team will now become part of ClearBridge, reporting to its co-chief investment officers Scott Glasser and Hersh Cohen, Athridge said.

Miller will not be joining ClearBridge. He will stay with LMM, an entity established with Legg Mason in 1999, and will continue to run the LMCM Opportunity Trust fund, which has about $1 billion in assets, Athridge said.

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