FRANKLIN RESOURCES INC (Form: 8-K, Received: 07/31/2020 17:10:47)

FRANKLIN RESOURCES, INC.

Date: July 31, 2020

/s/ Aliya S. Gordon

Aliya S. Gordon

Vice President and Secretary

FRANKLIN RESOURCES INC false 0000038777 0000038777 2020-07-31 2020-07-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 31, 2020

Franklin Resources, Inc.

(Exact name of registrant as specified in its charter)

Delaware

001-09318

13-2670991

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

One Franklin Parkway, San Mateo, California 94403

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (650) 312-2000

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

symbol(s)

Name of each exchange

on which registered

Common Stock, par value $0.10 per share

BEN

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Introductory Note

On July 31, 2020, Franklin Resources, Inc. (the “Company”) completed its previously-announced acquisition (the “Acquisition”) of Legg Mason, Inc. (“Legg Mason”) pursuant to the terms and conditions of the Agreement and Plan of Merger (the “Merger Agreement”), dated as of February 17, 2020, by and among the Company, Legg Mason and Alpha Sub, Inc. (“Merger Sub”).

Item 2.01

Completion of Acquisition or Disposition of Assets.

Pursuant to the Merger Agreement, on July 31, 2020, Merger Sub merged with and into Legg Mason (the “Merger”), with Legg Mason surviving the Merger as a wholly-owned subsidiary of the Company. At the effective time of the Merger (the “Effective Time”), each outstanding share of common stock, par value $0.10 per share of Legg Mason (the “Legg Mason Common Stock”), other than shares of Legg Mason Common Stock directly owned and held by the Company or Merger Sub, was cancelled, retired and converted into the right to receive $50.00 in cash, without interest (the “Merger Consideration”).

In addition, pursuant to the Merger Agreement, all issued and outstanding options to purchase shares of Legg Mason Common Stock (the “Legg Mason Options”) were automatically terminated and cancelled at the Effective Time and each holder of Legg Mason Options with a per share exercise price that was less than the Merger Consideration became entitled to receive a lump sum cash payment (less any applicable withholding taxes) in an amount equal to the product of (A) the number of shares of Legg Mason Common Stock underlying such Legg Mason Options immediately prior to the Effective Time, and (B) an amount equal to the Merger Consideration minus the applicable exercise price of such Legg Mason Options.

All issued and outstanding or payable restricted stock units in respect of Legg Mason Common Stock (the “Legg Mason RSUs”) were automatically terminated and cancelled at the Effective Time and each holder of a Legg Mason RSU became entitled to receive a lump sum cash payment (less any applicable withholding taxes) in an amount equal to (A) the product of (i) the Merger Consideration and (ii) the number of shares of Legg Mason Common Stock subject to such Legg Mason RSU, plus (B) any accrued but unpaid dividend equivalent rights in respect of such Legg Mason RSUs.

All issued and outstanding or payable performance restricted stock units in respect of Legg Mason Common Stock (the “Legg Mason PSUs”) were automatically terminated and cancelled at the Effective Time and each holder of a Legg Mason PSU became entitled to receive a lump sum cash payment (less any applicable withholding taxes) in an amount equal to the product of (A) the Merger Consideration and (B) the target number of shares of Legg Mason Common Stock subject to such Legg Mason PSU.

The shares of Legg Mason Common Stock, which previously traded under the symbol “LM,” ceased trading on the New York Stock Exchange as of the close of trading on July 31, 2020, and are being delisted from NYSE.

The foregoing description of the Merger Agreement and the Merger does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which was filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K on February 18, 2020, and is incorporated by reference herein.

Item 8.01

Other Items.

On July 31, 2020, the Company issued a press release announcing the completion of the Acquisition. A copy of this press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.

Item 9.01.

Financial Statements and Exhibits.

(a) Financial statements of business acquired.

The Company intends to file the audited consolidated financial statements and the unaudited consolidated financial statements required by this
Item 9.01(a) under cover of Form 8-K/A no later than 71 calendar days after the date this Current Report on Form 8-K was required to be filed.

(b) Pro Forma Financial Information.

The Company intends to file pro forma financial information required by this Item 9.01(b) under cover of Form 8-K/A no later than 71 calendar days after the date this Current Report on Form 8-K was required to be filed.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit 99.1

For Immediate Release

Franklin Templeton Completes Acquisition of Legg Mason

Establishes Franklin Templeton as One of the World’s Largest Independent,

Specialized Global Investment Managers

Combined Company to Offer Complementary Investment Strategies to

More Clients in More Places

San Mateo, CA, July 31, 2020 – Franklin Resources, Inc. (the “Company”) [NYSE:BEN], a global investment management organization with subsidiaries operating as Franklin Templeton, today announced that it has completed its previously announced acquisition of Legg Mason, Inc. [NYSE:LM] and its specialist investment managers.

The newly-combined organization establishes Franklin Templeton as one of the world’s largest independent, specialized global investment managers with a combined $1.4 trillion in assets under management (AUM) across one of the broadest ranges of high-quality investment teams in the industry. The combined footprint significantly deepens Franklin Templeton’s presence in key geographies and creates an expansive investment platform that is well balanced between institutional and retail client AUM.

“We’re extremely excited to announce the close of our Legg Mason acquisition, representing the largest and most significant transaction in Franklin Templeton’s history,” said Jenny Johnson, President and CEO of Franklin Templeton. “A tremendous amount has happened since we made our announcement in mid-February, but the strategic rationale for this powerful combination has only strengthened. This acquisition unlocks substantial value and growth opportunities driven by greater scale, diversity and balance across investment strategies, distribution channels and geographies. Our combined firm is aligned in terms of culture and our shared focus on delivering strong investment results for our valued clients.”

The transaction also brings notable added leadership and strength in core fixed income, equities and alternatives, as well as expanding the firm’s multi-asset solutions capabilities. Importantly, no changes are planned for the specialist investment managers’ differentiated investment strategies, which will benefit from Franklin Templeton’s global infrastructure and ongoing investment in technology and innovation.

“A significant amount of work has gone into preparing us for this exciting firm combination over the past five months, all during an unprecedented pandemic with nearly everyone involved working remotely. I want to thank employees from both companies for their tremendous contributions and exceptional focus on our clients and the business throughout the process,” Johnson added.

About Franklin Templeton

Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization with subsidiaries operating as Franklin Templeton in over 165 countries. Franklin Templeton’s mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the Company brings extensive capabilities in equity, fixed income, alternatives and custom multi-asset solutions. With employees in over 30 countries, including 1,300 investment professionals, the California-based Company has more than 70 years of investment experience and approximately $1.4 trillion in assets under management as of June 30, 2020 (on a pro forma basis for its acquisition of Legg Mason, Inc.). For more information, please visit franklinresources.com.

Forward-Looking Statements

Statements in this press release that are not historical facts are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. When used in this press release, words or phrases generally written in the future tense and/or preceded by words such as “will,” “may,” “could,” “expect,” “believe,” “anticipate,” “intend,” “plan,” “seek,” “estimate,” “preliminary” or other similar words are forward-looking statements.

Various forward-looking statements in this press release relate to the acquisition by Franklin Templeton of Legg Mason, including regarding expected scale opportunities, operating efficiencies and results, growth opportunities, client benefits, key assumptions, revenue realization, cost and expense synergies, financial and other benefits and returns, integration and its costs.

Forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors, some of which are listed below, that could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements. Important integration-related and other risk factors that may cause such differences include: (i) anticipated benefits of the transaction, including the realization of revenue, accretion, financial benefits or returns and expense and other synergies, may not be fully realized or may take longer to realize than expected; and (ii) Franklin Templeton may be unable to successfully integrate Legg Mason’s businesses with those of Franklin Templeton or to integrate the businesses within the anticipated timeframe.

Other important factors that may affect our business or the combined business’ future operating results, include, but are not limited to: (i) our business operations are subject to adverse effects from the outbreak and spread of contagious diseases such as COVID-19, and we expect such adverse effects to continue; (ii) failure to establish adequate controls and risk management policies, or the circumvention of controls and policies, could have an adverse effect on our operations, reputation and financial position; (iii) failure to protect our intellectual property may negatively impact our business; (iv) volatility and disruption of the capital and credit markets, and adverse changes in the global economy, may significantly affect our results of operations and may put pressure on our financial results; (v) the amount and mix of assets under management (“AUM”) are subject to significant fluctuations; (vi) the significant risk of asset volatility from changes in the global financial, equity, debt and commodity markets; (vii) our funds are subject to liquidity risks or an unanticipated large number of redemptions; (viii) harm to our reputation may negatively impact revenues and income; (ix) we may review and pursue other strategic transactions that could pose risks to our business operations; (x) strong competition from numerous and sometimes larger companies with competing offerings and products could limit or reduce sales of our products, potentially resulting in a decline in their market share, revenues and income; (xi) the ability to manage and grow our business and the combined business successfully can be impeded by systems and other technological limitations; (xii) poor investment performance of our products could reduce the level of our AUM or affect our sales, and negatively impact our revenues and income, (xiii) our business operations are complex and a failure to perform operational tasks properly or the misrepresentation of our services and products resulting, without limitation, in the termination of investment management agreements representing a significant portion of our AUM, could have an adverse effect on our revenue

and income, (xiv) dependence on key personnel could negatively affect financial performance; (xv) our business is subject to extensive, complex, and frequently changing rules, regulations, policies, and legal interpretations; (xvi) any significant limitation, failure or security breach of information and cyber security infrastructure, software applications, technology or other systems that are critical to operations could disrupt the businesses and harm operations and reputation; (xvii) regulatory and governmental examinations and/or investigations, litigation and the legal risks associated with the businesses, could adversely impact AUM, increase costs and negatively impact profitability and/or our future financial results; and (xviii) our contractual obligations may subject us to indemnification costs and liability to third parties.

Any forward-looking statement made in this press release speaks only as of the date on which it is made. Factors or events that could cause actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We do not undertake any obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

This release contains forward-looking statements subject to risks, uncertainties and other factors that may cause actual results to differ materially. For a detailed discussion of other risk factors, please refer to the risks, uncertainties and factors described in the Company’s and Legg Mason’s recent filings with the U.S. Securities and Exchange Commission, including, without limitation, each company’s most recent Annual Report on Form 10-K and subsequent periodic and current reports.

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Exhibit No.		Description

2.1		Agreement and Plan of Merger, dated as of February 17, 2020, by and among Franklin Resources, Inc., Legg Mason, Inc. and Alpha Sub, Inc. (incorporated by reference to Exhibit 2.1 of Franklin Resources, Inc.’s Current Report on Form 8-K filed on February 18, 2020)

99.1		Press Release, dated July 31, 2020, issued by Franklin Resources, Inc.

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)