Leucadia National to buy Jefferies Group for $2.6B
NEW YORK Leucadia National (LUK) is buying the investment banking firm Jefferies Group (JEF) for about $2.6 billion in stock.
Leucadia is a diversified holding company that also has interests in industries such as manufacturing, oil and gas-drilling services and gambling as well as a 28.6 percent stake in Jefferies.
Jefferies will become a Leucadia subsidiary if the deal is approved and will be Leucadia's largest business. It will still operate as a full-service investment banking firm. After the deal closes, 35.3 percent of Leucadia's stock will be owned by Jefferies Group stockholders.
As part of the deal, Jefferies Chairman and CEO Richard Handler will become the CEO of Leucadia. Leucadia's Chairman and CEO Ian Cumming will retire but remain on the board. Leucadia President Joseph Steinberg will become the company's chairman.
Jefferies' stockholders will receive 0.81 of a share of Leucadia stock for each share they hold. This doesn't include Leucadia's current 28.6 percent of Jefferies outstanding stock.
Jefferies' shares climbed $2.63, or 18.4 percent, to $16.90 before the market open.
Both companies' boards have approved the deal. It still needs the approval of both companies' shareholders.
Leucadia National announced in April 2011 that it planned to buy $125 million in Jefferies stock as part of Jefferies' $500 million stock offering.
On Monday, it said it will still operate in its current form, but may spin off its Crimson Wine Group before the Jefferies' deal is complete.
Once the transaction closes, Jefferies' four independent directors will join Leucadia's board, which will boost the board's size to 14 members.
Shares of Leucadia gained 25 cents to $22.05 in premarket trading.