News
June 23, 2005
Permal Management Structure to Remain In Place
We are pleased to inform you that Permal and its management shareholders have entered into an agreement with Legg Mason for the purchase by Legg Mason of a controlling interest in Permal, and giving Legg Mason the right to purchase all of the remaining interests in Permal over the next four years. The transaction is expected to close in the 4 th calendar quarter of 2005 following the receipt of certain approvals and consents and subject to customary closing conditions.
Following the closing, Permal will become a subsidiary of Legg Mason and will continue to be managed by its current management team, which will stay in place under long-term employment agreements. No management or other organizational changes are anticipated as a result of the transaction. It is and will continue to be very much business as usual at Permal, and Permal will be able to benefit from the resources of a large financial services firm committed to building and enhancing its asset management business.
Effect on the Permal Group
Permal has had a strong relationship with its current parent, Sequana Capital (formerly known as Worms & Cie.). While Sequana has historically been very supportive in the development of Permal's business, the sale of Sequana's interest is not expected to impact Permal's business or its day-to-day investment management. Permal is pleased to have the support of an excellent, industry-savvy parent. Permal does not foresee any change in its investment process, personnel, or operations and there are no plans to change its business strategies or locations.
Effect on Permal Funds
The investment objectives and terms (except with respect to the ownership of Permal) laid out in the offering circulars have not changed. Prior to the closing of the transaction, Permal will seek all necessary consents and approvals from the Permal Funds in accordance with applicable law and the terms of the transaction. Our strong relationships with our distribution partners remain intact. The Permal investment management team will continue to manage alternative investment fund of funds in the same style that Permal has used over the past 31 years.
Permal and its management shareholders have entered into an agreement with Legg Mason for the purchase by Legg Mason of a controlling interest in Permal. The transaction is expected to close in the 4th calendar quarter of 2005. Under the terms of the transaction, Legg Mason will acquire an 80% interest in Permal at closing with the right to purchase the remaining 20% over the next four years. The aggregate price for 100% of Permal is capped at $1.386 billion, with a $961 million floor.
Following the closing, Permal will become a subsidiary of Legg Mason and will continue to be managed by its current management team, which will stay in place under long-term employment agreements. No management or other organizational changes are anticipated as a result of the transaction. It is and will continue to be very much business as usual at Permal, and Permal will be able to benefit from the resources of a large financial services firm committed to building and enhancing its asset management business.
With an investment record of more than 30 years and $20 billion under management, Permal Group is one of the oldest and largest alternative asset management groups in the world. Permal was an innovator in the use of the multi-manager, multi-strategy investment concept on a global basis and has helped set the industry standard for fund of hedge funds investing. The business has offices in New York , London and Singapore , and was the first hedge fund manager to have all its offshore fund of hedge fund products rated by Standard & Poor's.
Additional information available at www.permal.com
Isaac Souede, Permal's Chief Executive Officer, commented: “Legg Mason is a very exciting development for Permal and opens up a new phase for our business, with additional opportunities in both the private client and institutional markets. Permal has had more than 30 successful years under Worms & Cie. (recently renamed Sequana Capital*). We are pleased to have the opportunity to develop further as part of a top-tier asset management organization, with a sterling reputation and philosophy of investment excellence.”
About Legg Mason (NYSE: LM)
Legg Mason, Inc., headquartered in Baltimore , Maryland , is a global investment firm, structured as a holding company, which provides asset management, securities brokerage, investment banking and related financial services through its subsidiaries. As of March 31, 2005, its assets under management totaled $373 billion with equity assets representing 38% of the total and fixed income assets representing 62%. Legg Mason currently does not offer alternative investments. Additional information available at www.leggmason.com.
Merrill Lynch, Pierce, Fenner & Smith served as financial advisor to Permal Group SCA and Berkshire Capital Corporation served as financial advisor to Permal management on the transaction . Shearman & Sterling LLP served as legal advisor to all the sellers on the transaction, whereas Freshfields Bruckhaus Deringer served as specific legal advisor to Permal Group SCA and Stroock & Stroock & Lavan LLP served as specific legal advisor to Permal management.
Preceding press release obtained from The Permal Group at www.permal.com. Berkshire Capital has reprinted this press release substantially in its entirety.
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