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News Jan 27, 2016

Shearman & Sterling Advises Legg Mason on Its Acquisition of a Majority Stake in Clarion Partners

Shearman & Sterling is representing Legg Mason, Inc. (“Legg Mason”) on its acquisition of an 83% ownership stake in Clarion Partners Holdings LLC (“Clarion Partners”) for $585 million pursuant to an Agreement and Plan of Merger, dated January 21, 2016.  In addition, Legg Mason will pay for its portion of certain co-investments on a dollar-for-dollar basis, estimated at $16 million as of December 31, 2015. The current management team will retain 17% of the outstanding equity in Clarion Partners.  Legg Mason and the current management team’s respective ownership rights will be governed by a new amended and restated limited liability company agreement of Clarion Partners. A significant number of Clarion Partners’ management team has also signed long-term employment contracts in connection with the transaction.  Legg Mason's ownership percentage and the purchase price may be adjusted lower if the management team elects before the closing to retain more than 17% (not exceeding 20%). The firm's previous majority partner, Lightyear Capital, will sell its entire ownership stake in the transaction. The transaction is expected to close in the second calendar quarter of 2016, subject to customary regulatory and other approvals.

Legg Mason (NYSE: LM) is a global asset management firm with $671.5 billion in assets under management as of December 31, 2015.  It provides active asset management in many major investment centers throughout the world. The acquisition of Clarion Partners significantly expands Legg Mason’s offerings across the alternative asset management category, adding differentiated real estate capabilities.  Legg Mason is headquartered in Baltimore, Maryland.

Clarion Partners is an SEC-registered investment adviser and FINRA member firm that has been a leading US real estate investment manager for 33 years.  Headquartered in New York, the firm has offices in Atlanta, Boston, Dallas, London, Los Angeles, São Paulo, Seattle and Washington, DC.  With approximately $40 billion in total assets under management as of December 2015, Clarion Partners offers a broad range of real estate strategies across the risk/return spectrum to its more than 200 domestic and international institutional investors. 

Lightyear Capital LLC is a financial services-focused private equity firm based in New York. Lightyear has raised over $2.5 billion of capital and makes primarily control investments in North America-based, middle-market financial services companies through its three affiliated private equity funds. Lightyear targets investments across the financial services spectrum, including asset management, banks, brokerage, financial technology, insurance and specialty finance. 

The Shearman & Sterling team included partners John A. Marzulli, Jr. (New York-M&A), Kenneth Laverriere (New York-Compensation, Governance & ERISA), Nathan Greene (New York-Investment Funds) and Michael  Shulman (Washington DC-Tax); and associates Robert Bucella (New York-M&A), Katie Butler (New York-M&A) and Tasha Matharu (New York-Compensation, Governance & ERISA).