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Franklin Templeton acquires Baltimore-based Legg Mason in $4.5 billion deal

Franklin Templeton completed its planned purchase of Baltimore-based Legg Mason Friday in a $4.5 billion deal that creates one of the world’s largest global investment managers but means a loss of jobs and of another corporate headquarters for the city.

Franklin, a California-based mutual fund giant, paid $50 per share of Legg Mason common stock in an all-cash transaction and assumed about $2 billion of Legg Mason’s outstanding debt.

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Franklin Templeton’s headquarters will remain in San Mateo, California, and the firm will keep a smaller presence in Baltimore, where Legg has had about 250 employees based in a decade-old tower in Harbor East.

The Baltimore-based investment manager agreed to be acquired by Franklin Templeton in February.

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The loss of Legg Mason, founded in the city 121 years ago, follows departures over the years of other headquarters, including Black & Decker, USF&G, Alex. Brown & Sons and Maryland National Bank. And it weakens the city’s foothold as a regional financial hub.

The combined workforce will be trimmed by about 8% globally, including some layoffs that occurred over the past two months, said Matthew Walsh, a Franklin spokesman. Legg Mason has about 3,000 employees worldwide, many in offices in New York, Connecticut and California.

Besides some job loss, “the bigger issues is the loss of another headquarters company,” said Karyl Leggio, a finance professor at Loyola University Maryland. “It’s a sad day for Baltimore to lose another headquarters.”

It will likely mean less support in the city for nonprofits and foundations that Legg Mason supported, while a branch office may not have the same appeal as a headquarters in attracting workers.

Franklin made cuts to the workforce after reviewing corporate functions of both firms and identifying overlap, Walsh said. He did not say how many layoffs have occurred or are planned in Baltimore.

“Our organization has been successful in having teams operating across our global locations, and we will continue to take that approach,” Walsh said.

The addition of the $806 billion managed by Legg Mason and its affiliates will allow Franklin to more than double to $1.4 trillion in assets under management.

The acquisition was completed by Franklin Resources, which operates through subsidiaries as Franklin Templeton in more than 165 countries and is best known for its consumer-oriented mutual fund business.

Legg, founded in 1899 as George Mackubin & Co. on Redwood Street downtown, survived the Great Depression and the housing and financial crisis that led to the last recession. The firm grew through acquisitions and mergers and took on the name Legg Mason in 1970.

The acquisition is the biggest ever for Franklin.

“A tremendous amount has happened since we made our announcement in mid-February, but the strategic rationale for this powerful combination has only strengthened,” Jenny Johnson, Franklin Templeton’s president and CEO, said in an announcement late Friday. “This acquisition unlocks substantial value and growth opportunities driven by greater scale, diversity and balance across investment strategies, distribution channels and geographies.”

Trading in shares of Legg Mason common stock was suspended at the close of business Friday and the stock was delisted from the New York Stock Exchange.

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