Here's What The Smart Money Says About The Jefferies Merger

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Here's what the smart money has said about the Jefferies / Leucadia merger:

'For Jefferies, the deal may allow them to grow and invest without market pressures in the short term'.

Christopher Wheeler, an analyst at Mediobanca SpA in London (Bloomberg)

'We were surprised by the announcement of the deal as we did not view JEF as a likely seller given its substantial growth over the past five years. 'That said, given the firm’s constraints on balance-sheet leverage, we struggled to model significant earnings growth that would result in return on equities in the high teens'.

Joel Jeffrey, analyst, KBW (Bloomberg)

'These deals are indicative of an extremely challenging environment for the standalone investment bank model. They could signal a lack of confidence in the potential recovery to volumes by certain industry insiders since one could argue that now would not be a good time to sell if volumes are set to materially rise'.

Chris Harris, analyst, Wells Fargo (Financial Times)

'Given the savvy of the two management teams, we suspect this is really just a financial transaction, and that Jefferies will be spun back out publicly in a couple of years when the environment has shown sustainable improvement and valuations for brokers-dealers are higher'.

David Trone, analyst, JMP Securities (Financial Times)

'In effect, Leucadia is saying that Jefferies is performing well, the sector is out of favor, and that is usually where they find long-term value creation as investors. I think solving their succession challenge was an added bonus'.

Richard Handler, CEO, Jefferies (The Wall Street Journal)

'I think this is a great outcome for shareholders and stakeholders of Jefferies, and a great outcome for Leucadia, and it helps both companies in a large way. It locks in a source of funding for Jefferies'.

Sean Egan, Egan-Jones (The Wall Street Journal)

'The synergies here are quite minimal. Supposedly, Leucadia will have greater access to Jefferies' research and investment-banking network. But these were available for hire from Jefferies without the cost of an acquisition'

John Carney (CNBC)

Jefferies to Sell Itself to Leucadia in $2.8 Billion Deal

Jefferies loses autonomy in $3.6bn deal (Paid content site)

Sean Egan: Jefferies’ Sale a ‘Great Outcome’ but Just a Double (Paid content site)

Leucadia's Upside-Down Acquisition of Jefferies

 

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