Pre-Xmas Firm Takeover Rumour Does The Rounds

2005 doesn't seem to want to go quietly. Just when you thought it was safe to start thinking about Turkey and Christmas pudding, along comes another investment banking takeover rumour.

Whether someone truly knows something, or a bored trader just decided to be a devil, remains to be seen, but shares in investment banking and institutional securities firm Jefferies & Co were up 3% at one stage Wednesday on a rumour that the firm was likely to be acquired by Merrill Lynch.

Clearly no-one at Merrill or Jefferies were prepared to comment, but the notion of a deal involving these two firms is an interesting one. Merrill boss Stan O''Neal has said on several occasions that he is on the look out for takeover targets, but that he is not going after that 'transformational' deal. Jefferies & Co would seemingly fit the bill.

Since being founded in 1962 by Boyd Jefferies (1930-2001), Jefferies & Co has grown from a one-man trading operation on the Pacific Coast Stock Exchange to a leading publicly traded investment bank. With offices in over 20 countries around the world, the firm has not had an unprofitable year in more than 25! It is regarded as one of the s.xiest firms around. And with just around 2,500 staff in the group, Merrill would be able to integrate the firm into its own activities without too much pain. There probably wouldn't be significant overlap in their activities either.

But, whether this Merrill speculation turns out good almost doesn't matter. Other firms will no doubt now also be casting their eyes over Jefferies, mulling the possibilities and running the numbers. There's nothing like a possible move by one of the big boys to spur the others into action.

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