8:11 a.m. | Updated
The Leucadia National Corporation said on Monday that it would buy the Jefferies Group in a deal valued at about $3.6 billion.
Shareholders of Jefferies will receive 0.81 of a Leucadia share for each of their shares, the announcement said. That represents a 24 percent premium to the closing price of Jefferies on Friday.
Leucadia, a conglomerate that has been likened to a “baby Berkshire Hathaway” because of the wide range of its holdings, already owns about 28.6 percent of Jefferies. After the deal closes, Jefferies shareholders will own 35.3 percent of the combined company.
The deal will give Jefferies a deep-pocketed owner as it continues to build out a full-service investment bank. The firm has sought to raise its profile in businesses like mergers advisory in part to provide a counterbalance to its core business of trading stocks and bonds.
The firm’s stock price has outperformed those of larger rivals like Goldman Sachs and Morgan Stanley over the last five years, though all three banks have struggled since the onset of the financial crisis.
Jefferies survived questions about its holdings in European debt last year, quickly selling off government bonds in an effort to assuage market fears.
Richard B. Handler, chairman and chief executive of Jefferies, will become Leucadia’s chief. Joseph S. Steinberg, Leucadia’s president and co-founder, will become chairman of the combined company. Ian M. Cumming, Leucadia’s other co-founder and its current chairman and chief executive, will retire but remain a director.
“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.”
Mr. Steinberg added of his 34-year partnership with Mr. Cumming: “Our partnership produced great returns for shareholders and we have had a lot of fun.”
Under the terms of the deal, Jefferies will continue to operate as a subsidiary of Leucadia and will still file financial reports to the Securities and Exchange Commission.
The transaction is expected to close in the first quarter of 2013.
Jefferies was advised by its own investment bank, along with JPMorgan Chase and the law firm Morgan, Lewis Bockius. A special committee of its board received advice from Citigroup and the law firm Wachtell, Lipton, Rosen Katz.
Leucadia was advised by Rothschild and the law firm Weil, Gotshal Manges, while its board was advised by UBS and the law firm Proskauer Rose.
Article source: http://dealbook.nytimes.com/2012/11/12/leucadia-to-buy-jefferies-in-3-6-billion-deal/?partner=rss&emc=rss