Citigroup is having trouble convincing mutual fund shareholders to approve its swap with Legg Mason Inc., The Baltimore Sun reports. The $3.7 million deal will remake Legg Mason into the fifth-largest money manager worldwide, while Citigroup, which is transferring $437 billion worth of assets to Legg Mason, will get its brokerage business.
Although Citigroup spokeswoman Mary Athrige said the company is "pleased with the acceptance the transaction is receiving," it failed to reach a quorum of 50% of shares in each fund to approve the exchange. Thus, Citigroup is planning on continuing to mail additional proxy information to shareholders in the coming weeks and hold another shareholder meeting in November.
The difficulties with the balloting have now forced the closing date for the deal to Dec. 1, from the original date of Nov. 1. The swap has already been approved by the Securities and Exchange Commission, as well as other agencies.
Chris Traulsen of Morningstar believes most investors are simply apathetic. "Shareholders get these lengthy documents full of legalese, and they have to decide: Do you sit down and read it for two hours and vote, or do you file it and assume everyone else will vote."