Dear Clients and Friends of Jefferies

Pen and Book, Write

Here is a note that CEO Richard Handler, who will become Leucadia CEO, and Brian Freidman, who will become President, sent to Jefferies clients:

'Dear Clients and Friends of Jefferies,

We are thrilled to tell you that today Jefferies has agreed to an all stock merger with Leucadia National (NYSE: LUK), a world class investor, our long term partner and our largest shareholder. Upon closing in the first quarter of 2013, we will become CEO and President of Leucadia, respectively, while retaining our current roles and responsibilities at Jefferies. Jefferies will become the largest operating company within a public S&P 500 company that will now have $9.3 billion of adjusted combined book value and over $5 billion of combined cash and short-term investments.

Most importantly, this transaction will allow Jefferies to continue its 50-year quest to build the best client-focused, entrepreneurial, full service, global investment banking firm to serve you. Jefferies will retain its name, independent regulatory filings, and all of our 3,814 employee partners from our 31 offices throughout the world. We will continue to invest in our platform to provide you with all of the products, services, regional presence and sector expertise that is required in the volatile and often-changing world in which we all operate.

We believe this merger will afford Jefferies the long-term opportunity to remain entrepreneurial, attract and retain outstanding professionals, and continue to use our financial capital to help facilitate clients’ needs and objectives. For the two of us personally, this transaction gives us the foundation and strength to build Jefferies into the far distant future. We often tell our employee-partners that we believe we are still in the early innings of building Jefferies.

It is important to note that this transaction is being done at a time of significant strength for both Leucadia and Jefferies. Leucadia has more excess cash and liquidity than any time in its recent history because of its recent successful sales of several investments, providing a source of strength and long-term opportunity for both Leucadia and Jefferies. Following recent sales and asset redemptions, Leucadia has approximately $2.4 billion in cash and public securities and $960 million of outstanding parent company debt. At August 31, 2012, Jefferies had cash and cash equivalents of $2.8 billion.

Having avoided the complexity and burdens of our bank holding company competitors, Jefferies is uniquely positioned as a global investment banking firm. In Jefferies, Leucadia is acquiring a strong engine to be its lead operating company for the future, and Jefferies is becoming part of a larger platform from which to continue its growth. The fact that this is an all stock merger allows both of our shareholder bases to benefit from the future upside of our companies, and further protects our respective bondholders from any challenges that may surface. With our foundation now stronger than ever, for every one of our employee-partners, it is business as usual to best serve you.

Thank you for all of your support and here’s to the next 50 years serving you as our most important partners'


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