Legg Mason to Buy Royce & Associates

Legg Mason Inc. has agreed to buy fund manager Royce & Associates Inc. for as much as $215 million, adding a lineup of well-regarded small- and micro-cap “value” stock mutual funds to its fund roster.

Royce & Associates, founded by Charles M. Royce in the early 1970s, oversees $5.3 billion in assets. The firm adds “a significant dimension to the mutual fund segment of our asset management business,” said Raymond Mason, CEO of Baltimore-based Legg Mason.

Nine of the 10 Royce funds ranked by fund tracker Morningstar Inc. have a four- or five-star rating, based on their trailing performance. The Royce funds adhere to a traditional value approach, investing in companies with low share prices in relation to underlying earnings, book value and other criteria, whereas some of Legg Mason’s value funds are known for being more eclectic.

The deal brings together two of the best-known names in value investing, as Royce will work alongside Bill Miller, who has beaten the Standard & Poor’s 500 index for 10 years in a row at his Legg Mason Value fund, a record at least among current managers.

Legg Mason, which manages $140 billion in assets, said it will not make any management changes at Royce funds.

Legg Mason shares closed unchanged at $50.15 on the New York Stock Exchange.