Legg Mason eying acquisitions, lift-outs overseas

Legg Mason eying acquisitions, lift-outs overseas
Just days after announcing job cuts domestically, Legg Mason Inc. is looking to make acquisitions or lift-outs internationally to expand its presence abroad.
JUL 27, 2010
Just days after announcing job cuts domestically, Legg Mason Inc. is looking to make acquisitions or lift-outs internationally to expand its presence abroad. The firm thinks that there are opportunities, particularly in Europe, to build its business, Ronald D. Dewhurst, head of international asset management, said today during a conference call for investors and analysts. Legg Mason is also looking at opportunities in Asia and Latin America, but that is further down the road, he said. Overall, Legg Mason is keeping an eye out for acquisitions and lift-outs globally, Jeffrey A. Nattans, the firm's head of specialized investment managers, told participants during the call. “As Ron mentioned, our primary product gap is the core international/global European equity space,” he said. “We are always looking to leverage our distribution organization and enhance it.” It makes sense for Legg Mason to expand its international offerings, particularly on the equity side, said Michael Kim, an analyst with Sandler O'Neill & Partners LP. “I think they have the international fixed income with Western Asset Management, but they don't necessarily have the depth and breadth on the equity side,” Mr. Kim said. Western Asset Management is an affiliate of Legg Mason. Legg Mason joins a number of firms trying to expand internationally, and most are focusing on Europe because it is a mature market, said Greggory Warren, an analyst at Morningstar Inc. “It's always easy to get a toe-hold in Europe because of the cultural similarities,” he said. “And there are some firms in Europe looking to divest their asset management businesses.” On the product development side, Legg Mason's ClearBridge Advisors affiliate has a closed-end fund in registration with the Securities and Exchange Commission. The fund is a master limited partnership that invests in the energy sector, Mark R. Fetting, Legg Mason's chairman and chief executive, said during the conference call. Legg Mason also is looking closely at the retirement income area, he said. “In that space, I think we have come up with some pretty innovative stuff there,” Mr. Fetting said, though he declined to elaborate. During its fiscal fourth-quarter earnings call on Monday, Legg Mason said the credit crisis has forced it to plan 350 job cuts and buy back $1 billion in shares. The job cuts are part of the firm's effort to move some of the corporate operations to its affiliates, executives told conference call attendees today. By shifting operations to its affiliates, Legg Mason anticipates that it can save $130 million to $150 million by the fourth quarter of fiscal 2012. Additionally, the firm plans to buy back $1 billion in shares over the next three years. In its fiscal fourth quarter, Legg Mason posted a profit of $63.6 million, or 39 cents a share, compared with a loss of $330.2 million, or $2.33 a share, a year earlier.

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