Leucadia to Acquire Jefferies

on Nov 12, 2012

Investment company Leucadia National (NYSE:LUK) announced it will buy Jefferies Group (NYSE:JEF) in a deal that values the investment bank at some $3.6 billion (£2.27 billion). Under the agreement, Jefferies stockholders will receive 0.81 of a Leucadia share for each share held, or $17.66 based on Friday’s closing price, which represents a premium of 24 percent to Jefferies’ Friday close of $14.27. If the deal goes through shareholders of the investment bank will own about 35 percent of Leucadia’s common stock.

“For Jefferies, the deal may allow them to grow and invest without market pressures in the short term,” said Christopher Wheeler, an analyst at Mediobanca SpA in London.
Leucadia shares were down 1.88 percent to $21.37 in the first minutes of today’s trading session on the US stock market. Jefferies’ stock gained about 12 percent to $16.
Richard Handler, Jefferies Chief Executive, will become Leucadia’s CEO and lead the combined company, while current chairman and CEO Ian Cumming will retire.

“Having known Joe and Ian for over two decades, this transaction represents the realization of a personal dream for me,” Mr. Handler said in a statement. “I am honored with the trust and confidence Ian and Joe are demonstrating by allowing us to carry on their life’s work.”
**Jefferies Expands Investment Banking and Capital Markets Platform in Asia**

!m[Shares in the “baby Berkshire Hathaway” and the Investment Bank Surge on The News](/uploads/story/773/thumbs/pic1_inline.png)Last week the investment bank announced the expansion of its Asia Investment Banking business with five new senior appointments, who will be based in Hong Kong, the firm’s Asian headquarters. According to Benjamin D. Lorello, Global Head of Investment Banking and Capital Markets, the expansion of the investment unit demonstrates Jefferies commitment to serving its clients in Asia, as well as to provide clients outside the region with strong Asian sector, product and country expertise.

The Wall Street Journal describes Jefferies as one of the fastest growing securities firms in the United States since the financial crisis, hiring investment bankers and traders from larger rivals on Wall Street. Mr Lorello himself was “stolen” from UBS to run the investment-banking and capital-banking businesses at Jefferies. In 2011 Jefferies had net revenue of $2.5 billion (£1.57 billion), up from $2.2 billion (£1.38 billion) in the fiscal 2010 and $1.6 billion (£1.01 billion) in 2007.

**About Leucadia National**
The conglomerate is also known as the “baby Berkshire Hathaway” because of its wide range of holdings including mining & drilling services, manufacturing, healthcare services, telecommunications, banking and lending, real estate and winery. It already owns a 28 percent stake in Jefferies.
When Jefferies was in trouble because its shareholders feared exposure to European assets the investment bank increased the transparency in its European division, reduced its holdings and alleviated investors’ concerns. “The Bears were bloodied and beaten back,” Leucadia told shareholders in its annual report. “We are proud of our ownership and association with Jefferies and believe their response was their finest hour.”
Leucadia’s last big purchase was in December 2011 – a controlling stake in the National Beef Packing Company (“National Beef”), A US beef processing company.


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