Offering fresh evidence of the rapid consolidation among asset management firms, Legg Mason Inc. said Tuesday it has agreed to buy Brandywine Asset Management Inc. for about $135.3 million of stock.
The deal for the Wilmington, Del., company would boost by 13%, to $60 billion, the assets under management at Legg Mason, a Baltimore investment manager and securities brokerage. The transaction is slated to close in the first quarter.
Brandywine, a privately owned firm with $7 billion under management, focuses primarily on institutional investors but also does some high-net- worth business and has a small mutual fund family, said Edward A. Taber 3d, Legg Mason's head of asset management.
Mr. Taber said a number of bidders had emerged for Brandywine but no commercial bank was among them. He declined to identify Legg Mason's competitors in the auction.
But banks have been in the bidding for other asset managers currently on the block, including Chancellor/LGT Asset Management, a Liechtenstein company with about $65 billion under management.
Credit Suisse First Boston and Deutsche Bank were reportedly among bidders for the European firm. Goldman, Sachs & Co. is said to have accepted bids 10 days ago, and the deal is now in due diligence, said a source. It could not be learned whether the finalist was one of the banks.
Meanwhile, one observer said he expects the newest European banking behemoth, to be known as United Bank of Switzerland, to begin looking soon for a retail asset management capability.
The company, to be formed next year through a merger of Swiss Bank Corp. and Union Bank of Switzerland, would have "virtually no retail assets, and the greatest growth in the investment management business is in the retail area," said Burton J. Greenwald, a New Jersey mutual fund consultant.
Legg Mason's deal for Brandywine is to take the form of a pooling of assets, said Mr. Taber. The buyer would issue 2.6 million shares of its common stock, or 10% of its outstanding shares, and would replace 200,000 Brandywine stock options with its own stock, Mr. Taber said.
Shares of Legg Mason, which trades on the New York Stock Exchange, closed Tuesday at $52, up 31.25 cents.
