* Deal will strengthen Jefferies' balance sheet
* Leucadia will be able to use tax benefits
* Expected to close in Q1 2013
* Jefferies' shareholders will end up with 35 pct of
By Jed Horowitz and David Henry
Nov 12 Jefferies Group Inc is selling
itself to Leucadia National Corp, its biggest
shareholder, in a deal aimed at reassuring investors it has
access to long-term funding.
Leucadia, which models itself on Warren Buffett's Berkshire
Hathaway and owns companies ranging from real estate to
mining, is paying $2.76 billion in stock for the 71 percent
stake of Jefferies it does not own.
The deal is the latest sign that Wall Street firms are
scurrying to answer investor questions about their funding and
long-term profitability in the wake of new rules and
Leucadia had previously purchased one million shares of
Jefferies in November 2011 to calm market fears about the firm's
viability during the European banking crisis and in the
aftermath of the bankruptcy of MF Global.
The plan announced Monday values the combined company at
$3.6 billion. Jefferies shareholders will receive 0.81 of a
Leucadia share, valuing their stock at $17.66 per share, a
premium of 24 percent to its Friday closing price of $14.27.
Jefferies shares were up 13.1 percent to $16.41 in late
afternoon trading on the New York Stock Exchange. Leucadia was
off 3.7 percent at $20.90.