Citigroup announced over the weekend that it has signed a definitive agreement to sell its asset management business in exchange for Legg Mason’s 1,500-strong network of brokers and approximately $1.5 billion of Legg Mason’s common and convertible preferred shares and $550 million in the form of a five-year loan facility provided by Citigroup Corporate and Investment Banking.
The $3.7 billion transaction does not include Citigroup’s asset management business in Mexico, its retirement services business in Latin America or its interest in the CitiStreet joint venture.
In the three-year global agreement Citigroup will continue to offer its clients asset management’s products and in addition, inherit Legg Mason Wood Walker’s position as the primary domestic provider of Legg Mason’s equity fund family, including the top performing equity funds of Legg Mason Capital Management Inc. managed by Bill Miller. Citigroup’s Global Wealth Management businesses, Smith Barney and the Citigroup Private Bank, as well as Primerica and Citibank will offer the asset management products.
“We have been assessing our options for the asset management business and have found, in Legg Mason, a partner with an excellent product set that both complements and enhances our existing product offering to our customers,” said Charles Prince, chief executive officer of Citigroup, in a statement. “In addition, we are adding 1,354 experienced financial advisors in 127 branch offices to our Wealth Management business.”