November 12, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of investment banking firm Jefferies Group (NYSE: JEF ) climbed 12% today after agreeing to be acquired by diversified holding company Leucadia National (NYSE: LUK ) for about $2.7 billion.
So what: The all-stock deal -- Jefferies stockholders will receive 0.81 of a Leucadia share for each share they hold -- values Jefferies at roughly $17.66 per share and represents a 24% premium to its closing price on Friday. Leucadia -- which already holds about 29% percent of Jefferies -- is making the move to help Jefferies weather the current market turmoil, but judging by its own stock's 5% plunge today, Mr. Market isn't thrilled with the price being paid to do it.
Now what: As part of the deal, Jefferies CEO Richard Handler will become the new CEO of Leucadia, Leucadia's Chairman and CEO Ian Cumming will retire, and Leucadia President Joseph Steinberg will become Chairman, marking a whole new chapter for Leucadia, often called a mini Berkshire Hathaway (NYSE: BRK-A ) . "This merger will allow us to continue to create long-term value for all of our clients, shareholders, employee-partners and bondholders," 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." With Leucadia shares flirting with a new 52-week low today, now might even be a good time to bet on Handler's torch-carrying abilities.
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