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June 27, 2005 at 08:00 PM
Legg Mason Inc (LM) and Citigroup Inc (C) announced a $3.7 billion deal under which Citigroup will trade substantially all its asset management business for Legg Mason’s brokerage operations.
The Citigroup business has $437 billion in assets under management. The unit includes its Smith Barney mutual funds. The deal excludes Citigroup’s asset management business in Mexico, its retirement business in Latin America, and its interest in CitiStreet.
Citigroup is acquiring Legg Mason’s private client brokerage and capital markets businesses, about $1.5 billion in Legg Mason common stock and nonvoting convertible preferred stock and about $550 million in the form of a five-year loan facility provided by Citigroup’s corporate and investment bank.
Separately, Legg Mason said it will acquire the Permal Group, a manager of funds-of-hedge-funds that oversees about $20 billion in assets.
