The Leucadia National Corp. (NYSE:LUK) has just announced that it intends to purchase the Jefferies Group, Inc. (NYSE:JEF) in a $3.6 billion deal. According to the announcement, Jefferies shareholders are expected to receive .81% of a Leucadia share per Jefferies share they own. That’s approximately a 24 percent premium of Jefferies’ Friday closing price, and it values the company at around $3.7 billion, a significant increase in Friday’s value of the company at $2.9 billion. Executives of Jefferies and Leucadia expect the deal to close in the first part of 2013, if the shareholders of both companies approve it.
Leucadia National Corp. (NYSE:LUK) already owns approximately a 28 percent stake in Jefferies Group, Inc. (NYSE:JEF). The New York firm is a conglomerate, with deep pockets and holdings in a variety of industries, from timber to wine to beef processing. Leucadia is known within the industry as “Baby Berkshire” because of how similar it is to Berkshire Hathaway, Inc., a much larger company that’s owned by billionaire Warren Buffet.
In recent years, Jefferies has been one of the fastest-growing U.S. securities firms. The company has been pulling investment bankers and traders from larger Wall Street rivals.
This morning, company executives sayafter the deal, Jefferies Group, Inc. (NYSE:JEF) will be Leucadia’s largest business and will keep operating in its current form as a global investment firm. Jefferies and Leucadia National Corp. (NYSE:LUK) will each retain their own credit ratings, and Jefferies’ current debt will continue to be outstanding.
Leucadia National Corp. (NYSE:LUK)'s current president and co-founder, Joseph S. Steinberg, is expected to become the combined company’s chairman, while current Jefferies Group, Inc. (NYSE:JEF) chairman and CEO, Richard B. Handler, is expected to become the chief of Leucadia. Leucadia’s other co-founder and current chairman and CEO, Ian M. Cumming, is expected to retire when the deal closes, although he will continue to be a director.