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Legg Mason Acquires Fauchier

Zacks Equity Research

Asset Management company, Legg Mason (LM) together with its affiliate, Permal Group announced the successful completion of its acquisition of London-based fund-of-hedge-funds firm - Fauchier Partners. Financial details of the transaction are unknown.

Fauchier will be integrated with Permal to form a new entity with $24 billion worth AUM. The combined entity will operate through 9 offices and a global investment team based in New York, London, Paris and Singapore.

Fauchier was formerly a part of BNP Paribas Investment Partners, an asset management unit of BNP Paribas SA (BNPQY). It had assets under management (:AUM) worth $6 billion at the time of the acquisition.

The transaction is expected to be accretive to Legg Mason’s earnings in the first year and also demonstrates the company’s aim of providing exceptional services to its clients. As for Permal, the transaction will enable the company to expand its institutional business globally with the help of the acquired firm’s asset management brand and proficiency.

On the other hand, the deal widens Fauchier’s scope and will lend support to its expansion efforts with the commitment of providing the best investment decisions to its clients. Overall, the clients of Fauchier will have access to the industry's largest managed account platforms provided by Permal.

The shares of Legg Mason rose to a new 52-week high at $31.40 on March 13.  We believe that Legg Mason has the potential to outperform its peers in the long run based on its diversified product mix, strategic acquisitions and leverage to the changing market demography. Also, the company’s restructuring initiatives and cost-cutting measures are likely to improve its operating efficiencies.

Legg Mason currently has a Zacks Rank #2 (Buy). Other stocks to watch out for in the industry are Lazard Ltd. (LAZ) and Cohen & Steers Inc. (CNS), both carrying a Zacks Rank #1 (Strong Buy).

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