Leucadia Simplifies its Business Mix and is Rebranded as Jefferies Financial Group Inc.

LeucadiaFXCM, the retail forex exchange broker which recently changed its brand identity to Leucadia, is again soon to get a new corporate identity. Its holding company, Leucadia National Corporation (NYSE: LUK) that owns an investment bank, Jefferies has announced plans to sell its non-finance assets for $1.3 billion. Post the conclusion of the sale, the corporation will change its name to Jefferies Financial Group Plc., to reflect the change and greater focus on a particular asset than what was earlier seen as a relatively random collection of assets.

Leucadia took control of Jefferies five years ago and has been making a significant capital investment into the business. The group has been also hiring executives and building up teams from European rivals, Deutsche Bank and Credit Suisse.

National BeefLeucadia National Corporation, an oil-to-beef conglomerate has agreed to sell 48 percent stake in National Beef Packing to Marfrig Global Foods of Brazil for about $900m in cash and equity interests in Garcadia to its current partner, the Gariff Family, for a total consideration of $375 million in cash and $50 million in redeemable preferred equity.

Rich Handler, CEO of Leucadia said in a statement: 

“The deals “complete Leucadia’s transformation from a highly diversified, but relatively random, group of assets before the combination with Jefferies into a financial services company with clear focus and drive.”

“We are excited and energized by the simplification of our business mix, the focus and brand awareness of our anticipated name change, our abundance of cash, and the strength and potential of our businesses. We would like to thank our clients and customers, employee-partners, fellow shareholders, bondholders and all others associated with our businesses for their continued support.”

The proposed simplification of the business mix will allow Jefferies to focus greatly on the $1 trillion market for leveraged loans which is now seeing strong demand on the back of low-interest rate and pick up in market volatility. Post the announcement, the group’s share witnessed a significant rise in volume with the price going higher by 13 percent during lunchtime on Monday. 

The corporation also released its preliminary estimates for the first quarter result of 2018. Based on the current calculations, Leucadia is likely to report EBIT of $100-115 million and net income attributable to Leucadia National Corporation common shareholders of $120-131 million, or $0.32-0.35 per diluted shares. 

Messrs. Handler and Friedman commented on the preliminary first quarter results:

“Our estimated first-quarter results reflect expected continued strong performances from our businesses. We are pleased with Jefferies’ first-quarter net revenues of approximately $820 million and pre-tax income of approximately $120 million, as well as National Beef’s estimated pre-tax income of approximately $64 million in what is typically a lighter seasonal quarter for beef processing. Berkadia, Garcadia, Idaho Timber and Vitesse all continued to perform well this quarter. Our estimated results also include an unrealized $21 million mark-to-market decrease in the value of our HRG investment and a net loss at Leucadia Asset Management as a result of the first quarter period of exceptional volatility.”