Legg Mason sells Naples firm

NAPLES — Legg Mason plans to sell Private Capital Management to its managers, the company's chief executive told investors.

In a transcript of a recent conference call with analysts posted on SeekingAlpha.com, Legg Mason CEO and President Joseph Sullivan says the sale of PCM will close by the end of the September quarter. Sullivan also says Legg Mason expects to take a $3 million charge, though he didn't spell out the full terms of the deal.

Established to manage money for the Collier family, PCM was a limited partnership owned by its co-founder, Miles Collier, and by its two operating principals: Bruce Sherman, who co-founded the company with Collier in 1985, and Gregg Powers. The firm, which is now run by Powers after Sherman retired, manages money for high-net-worth individuals and institutional investors.

When Legg Mason bought PCM in fall 2001, the Baltimore-based firm paid $682 million in cash up front and agreed to two “earn out” payments on the third and fifth anniversaries of the acquisition, based on PCM's asset growth. The total deal, which was announced in May 2001, was capped at $1.38 billion.