Nelson Peltz to join Legg Mason board

Billionaire investor doubles his stake in ailing financial firm

Billionaire investor Nelson Peltz built a reputation agitating for change at the food and beverage companies in his portfolio. Now he is turning his attention to the financial industry by accumulating a significant stake in Legg Mason and joining its board.

Legg Mason on Monday announced an agreement with Peltz's New York-based investment firm, Trian Fund Management, to add Peltz as a director. Trian now owns 4.3 percent of Legg Mason, double the 2.1 percent stake it held as of June, according to regulatory filings.

Peltz said in a statement that his firm is looking forward to working with Legg Mason and improving its performance. Under the agreement, Peltz will not purchase more than 9.9 percent of Legg Mason stock. Trian now holds about 6.9 million Legg Mason shares.

Long a fixture in Baltimore, Legg Mason was founded in 1962 by Raymond A. "Chip" Mason, who built the firm into one of the world's biggest asset managers, with $1 trillion under management in 2007.

However, the financial crisis and ensuing recession hit Legg Mason hard. The firm took heavy losses on investments in mortgage-backed securities, and its assets under management slipped to $703 billion as of September. Legg Mason's flagship Value Trust fund, run by Bill Miller, plunged 54 percent in 2008, although it's up more than 35 percent so far this year.

The company's shares tumbled from a high of $136 in 2006 to a low of $10.35 last March. Since then, the shares have rebounded, along with the broader market, and on Monday they closed at $31.69, down 18 cents.

Analyst J. Jeffrey Hopson of Stifel Nicolaus said Legg Mason is in the middle of a turnaround, and he discounted reports that Peltz's real target is the firm's fixed-income unit, Western Asset Management.

"If I were a shareholder, I would be thrilled to have Peltz there watching management to make sure they do the positive thing," Hopson said. "But to achieve shareholder value, the best thing to do is let the turnaround process happen."

Forbes magazine ranks Peltz 366 on its list of 400 richest Americans, with an estimated net worth of about $1 billion. He is on the board of directors at Wendy's/Arby's Group fast-food chain and at ketchup giant H.J. Heinz.

Peltz's most famous deal involves Snapple, the beverage company he purchased for $300 million in 1997 and sold three years later to Cadbury Schweppes for $1.5 billion.

"We welcome Nelson," Legg Mason Chairman Mark R. Fetting said in a statement. "We look forward to benefiting from his insights and experience as we work together to build greater value for our clients and our shareholders."