On Nov. 12th Leucadia National (LUK) announced it was buying Jefferies Investment Bank (JEF) for $2.6 Bn in stock. They're paying about a 22% premium for what the stock was . Leucadia plans to swap 0.81 of its shares for each share. Leucadia already owned 28.6% of prior to this merger, and is paying ~ 1.2x of JEF book value.
gets the use of Leucadia National larger . Leucadia has a liquid B/S of $2.4 Bn, less $960 MM debt.
Is this a buy that makes sense ?
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I believe so. JEF stock on Fri. ($15.75) was at almost half its peak of $30 about three years ago. Average analyst recommendation on the stock was a "HOLD" previously. has BBB credit rating (S&P) while Leucadia is a junk +. S&P said it expects to upgrade LUK after the merger.
CEO Richard Handler is expected to take over as CEO after the merger. Leucadia's president, Ian Steinberg, will become Chairman. was recently in the news for a $400 MM lifeline investment in firm Knight Capital.
Times are testing for. Financial agreed to buy in a deal valued at $575 million. & Co recently put itself up for sale.
Who is Leucadia National ? Leucadia is a holding company that also owns National Beef Meatpacking (a meat-packer), the Hard Rock Hotel & Casino in Biloxi, Miss and plastics and lumber businesses, among others. Leucadia also owned half ofjunk-bond operation.