Jefferies Financial Group Inc. · NYSE:JEF
Jefferies Financial — Merger or Acquisition (November 2012)
43 slides from Jefferies Financial's merger presentation, Nov 12, 2012
Slide 1: Leucadia – Jefferies: A Unique Combination
Leucadia – Jefferies A Unique Combination November 12, 2012
Slide 2: Note on Forward Looking Statements
Note on Forward Looking Statements This document contains “forward looking statements” within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward looking statements include statements about Jefferies’
Slide 3: Important Information for Investors and Shareholders
Important Information for Investors and Shareholders Leucadia National Corporation (Leucadia) plans to file with the SEC a Registration Statement on Form S-4 in connection with the proposed transaction, and Leucadia and Jefferies Group, Inc. (Jefferies) plan to file with the SEC and mail to their re
Slide 4: Note on Financial Presentation and Assumptions
Note on Financial Presentation and Assumptions This document presents financial information of Leucadia and Jefferies on a combined basis. The presentation makes certain stated assumptions including (i) the spin-out of Leucadia’s Crimson Wine Group, (ii) the assumptions made pertaining to the financ
Slide 5: Merger Overview
Merger Overview LEUCADIA NATIONAL CORPORATION afl oy ad Jefferies
Slide 6: Press Release – November 12, 2012
Press Release – November 12, 2012 LEUCADIA NATIONAL CORPORATION AND JEFFERIES GROUP, INC. TO MERGE Strategic Combination, With Over $9 Billion in Shareholders’ Equity, Supports Long-Term Value Creation Leucadia, with its 35-year track record as one of the world’s leading long-term investors, will co
Slide 7: Press Release – November 12, 2012 (continued)
Press Release – November 12, 2012 (continued) NEW YORK, NEW YORK, NOVEMBER 12, 2012 – Leucadia National Corporation (NYSE: LUK) and Jefferies Group, Inc. (NYSE: JEF) today announced that the Boards of Directors of both companies have approved a definitive merger agreement under which Jefferies’ shar
Slide 8: Press Release – November 12, 2012 (continued)
Press Release – November 12, 2012 (continued) Upon the closing of the merger, Mr. Handler will become the Chief Executive Officer of Leucadia, as well as one of its Directors, and also remain Jefferies’ Chief Executive Officer and Chairman; Mr. Friedman will become Leucadia’s President and one of it
Slide 9: Press Release – November 12, 2012 (continued)
Press Release – November 12, 2012 (continued) Mr. Cumming observed: “Joe and I have been partners for 34 years. He will be Chairman of the Board of the combined enterprise. His role as Chairman of the Board, along with other Leucadia and Jefferies Directors, will ensure continuity and propel our con
Slide 10: Press Release – November 12, 2012 (continued)
Press Release – November 12, 2012 (continued) Jefferies & Company, Inc. acted as financial advisors to Jefferies. Citigroup Global Markets Inc. acted as financial advisors and provided a fairness opinion to the Transaction Committee of the Jefferies Board of Directors (“Transaction Committee”), and
Slide 11: Press Release – November 12, 2012 (continued)
Press Release – November 12, 2012 (continued) For further information, please contact: Peregrine Broadbent Chief Financial Officer Jefferies Group, Inc. (212) 284-2338 or Laura Ulbrandt Corporate Secretary Leucadia National Corporation (212) 460-1900 7
Slide 12: Leucadia – Jefferies
Leucadia – Jefferies Leucadia – Jefferies merger creates a unique combination Leucadia will be in the business of merchant investing and owning Jefferies, an investment banking firm Jefferies will continue its over 50-year focus in the capital markets and maintain a highly liquid balance sheet Futur
Slide 13: Merger Considerations
Merger Considerations A merger of Leucadia and Jefferies should generate significant value for shareholders Jefferies has grown rapidly over the past two decades and is well-positioned to continue this growth with Leucadia’s support ─ Jefferies’ capabilities, personnel, financial position and client
Slide 14: Leucadia Investments
Leucadia Investments Following the merger, new acquisitions and investments will leverage the knowledge base, opportunity flow and execution capabilities of Leucadia and Jefferies’ management team and operating businesses Leucadia’s investment and operating team will continue to source and analyze i
Slide 15: Balance Sheet Strength and Scale
Balance Sheet Strength and Scale Merger will enhance both Leucadia and Jefferies’ liquidity, scale and overall financial strength Combined balance sheet: ─ Total Assets: $42.1 billion (1) ─ Total Shareholders’ Equity: $9.3 billion (1) ─ Leucadia Book Value per Share, Adjusted for Merger: $24.69 (1)
Slide 16: Long-Term Leadership Stability and Strategic Continuity
Long-Term Leadership Stability and Strategic Continuity Richard Handler, Jefferies’ CEO, and Brian Friedman, Executive Committee Chairman, will serve as Leucadia’s new CEO and President, respectively, while continuing as hands-on leaders of Jefferies Joe Steinberg, Leucadia’s current President, will
Slide 17: Both Jefferies and Leucadia Have Long-Term, Value-Oriented Cultures
Both Jefferies and Leucadia Have Long-Term, Value-Oriented Cultures Jefferies and Leucadia’s relationship has been built over twenty years Jefferies and Leucadia have worked together and partnered on countless financings and strategic transactions, including Jefferies High Yield Funds (2000 – 2007),
Slide 18: Jefferies Group
Jefferies Group LEUCADIA NATIONAL CORPORATION afl oy ad ua Jefferies
Slide 19: Key Jefferies Strengths
Key Jefferies Strengths Richard Handler and Brian Friedman, with almost 60 years of combined experience (more than half at Jefferies), have led Jefferies for over 11 years Active and empowered Executive Committee comprised of 15 members of senior management, including the CEO and the Chairman of the
Slide 20: Key Jefferies Strengths (continued)
Key Jefferies Strengths (continued) Nine months 2012 adjusted net revenue: $2.22 billion (1) Strong Financial Cumulative adjusted pre-tax earnings of $1.73 billion since 2009 (1) Profile Average quarterly adjusted pre-tax margin of 18.1% since 2009 (1) Significant market share available due to regul
Slide 21: Core Principles
Core Principles Jefferies is focused on the following core principles to manage risk and deliver across-the-cycle revenue and earnings growth: Consistent Profitability ─ Jefferies has remained solidly profitable despite the volatile trading environment in global markets since 2009 Driving Productivi
Slide 22: Share Price Performance Since 2000
Share Price Performance Since 2000 Since 2000, Jefferies has significantly outperformed its peers Total return of 27.9x since 1990, representing a compound annual growth rate of 15.9% Share Price Performance (Rebased to 100 as of 01/01/2000) (1) 200% 159% 150% 100% 50% 30% 0% (4%) (5%) (20%) (50%) (
Slide 23: Jefferies – A Full-Service Investment Bank
Jefferies – A Full-Service Investment Bank Jefferies offers clients advice and execution across all major products and markets globally Investment Equities Fixed Income Jefferies Bache Asset Management Banking Cash Electronic Investment Leveraged Equity Capital Hedge Listed Futures Base Metals Consu
Slide 24: Jefferies – Financial Performance
Jefferies – Financial Performance Financial Summary ($ Millions) Fiscal Year Nine Months 2011 2012 Equities $ 594 $ 466 Fixed Income 715 897 Sales & Trading 1,309 1,363 Other 74 13 Equity 187 141 Debt 385 310 Capital Markets 572 451 Advisory 550 392 Investment Banking 1,123 843 Asset Management Fees
Slide 25: Jefferies Revenues & Net Income – Since 1990
Jefferies Revenues & Net Income – Since 1990 ($ Millions) With the exception the global financial crisis in 2007-2008, Jefferies has not had a single loss quarter dating back to 1990 Jefferies raised $433 million of equity from Leucadia in 2008, more than mitigating the impact of our operating loss
Slide 26: Consistent Profitability Across the Cycle
Consistent Profitability Across the Cycle ($Millions) Jefferies has generated pre-tax earnings of $1.7 billion since 2009 ─ Average pre-tax margin of 18.1% $200 35.0% $167 $172 $175 $163 30.0% $150 $144 $143 $130 25.0% $119 $122 $124 $127 $121 $125 20.0% $100 $76 15.0% $75 $54 $49 10.0% $50 $25 $14
Slide 27: Jefferies Profitability and Trading Income Much More Stable Than Peers
Jefferies Profitability and Trading Income Much More Stable Than Peers Standard Deviation of Quarterly Net Earnings – Last 11 Quarters (1) 150% 137% 120% 90% 74% 65% 61% 60% 45% 30% 30% 20% 0% Jefferies Goldman Sachs Morgan Stanley Citi (2) Bank of America Merrill (2) JP Morgan (2) Peer Weighted Ave
Slide 28: Consistent Common Equity Growth
Consistent Common Equity Growth Jefferies has grown common equity by $1.6 billion, or 95%, since the financial crisis began in Q1 2008 Jefferies’ proactive equity capital raises have helped the firm navigate the global financial crisis and capitalize on growth opportunities Common Equity Growth – Si
Slide 29: Leucadia National
Leucadia National LEUCADIA NATIONAL CORPORATION afl oy ad 2s Jefferies
Slide 30: Leucadia Overview
Leucadia Overview Key Points From Leucadia’s 2011 Annual Report: Leucadia National Scorecard Publicly Listed: LUK (NYSE) Return on % Change in Market Average Market Cap: $5.3 billion (11/09/12) S&P 500 with Price Market Share- Book Value Book Value Dividends Per Price Shareholders' Net Income holder
Slide 31: Leucadia – Subsidiaries and Investments
Leucadia – Subsidiaries and Investments National Beef ─ 4th largest beef processor in the US, with significant operations in hide tanning, direct-to-consumer beef sales, retail package preparation and logistics ─ Major exporter to foreign markets, including Asia and the Middle East Inmet Mining ─ Pu
Slide 32: Leucadia – Subsidiaries and Investments
Leucadia – Subsidiaries and Investments Conwed ─ Market leader in lightweight oriented and extruded plastic netting ─ Partners with customers to customize core technology into innovative solutions Linkem ─ Start-up wireless broadband services provider in Italy Idaho Timber ─ Wood product manufacture
Slide 33: Leucadia – Recent Liquidity Events
Leucadia – Recent Liquidity Events Leucadia recently completed three major realizations, generating an aggregate of over $1.2 billion of incremental cash Fortescue Royalty Note: ─ On October 18, 2012, Fortescue redeemed Leucadia’s 2006 Royalty Note for $715 MM in cash, or a pre- tax gain of $526 MM,
Slide 34: Leucadia – Post-Merger Balance Sheet Parameters
Leucadia – Post-Merger Balance Sheet Parameters Post-merger, Leucadia will target specific concentration, leverage and liquidity principles ─ Concentration: Leucadia’s single largest equity investment (excluding Jefferies) will be no greater than 20% of book value (currently, National Beef), with no
Slide 35: Appendix
Appendix 5 & = z ‘ 2 Z = E g F 3 Fs 5 | g a” Jefferies
Slide 36: Reconciliations
Reconciliations Adjusted Jefferies Book Value Reconciliation Adjusted Combined Book Value and Book Value per Share Reconciliation Adjusted Jefferies Book Value Reconciliation Adjusted Combined Book Value and Book Value per Share Reconciliation ($ Millions) 09/30/12 ($ Millions) 09/30/12 LUK Share Pr
Slide 37: Reconciliations
Reconciliations Leucadia Cash & Public Securities Reconciliation Deferred Tax Asset Reconciliation Leucadia Cash & Public Securities Reconciliation Deferred Tax Asset Reconciliation ($ Millions) 09/30/12 ($ Millions) 09/30/12 Leucadia Available Liquidity (1) 1,992.2 Current Deferred Tax Asset (1) 77
Slide 38: Reconciliations
Reconciliations Subsidiaries & Investments Capital Reconciliation Combined Assets Reconciliation Subsidiaries & Investments Capital Reconciliation Combined Assets Reconciliation ($ Millions) 09/30/12 ($ Millions) 09/30/12 Leucadia Book Value (1) 6,191.9 Leucadia Consolidated Assets (1) 8,740.2 Estim
Slide 39: Reconciliations
Reconciliations Leucadia Parent Company Debt Reconciliation Leucadia Parent Company Debt Reconciliation ($ Millions) 09/30/12 Debt Due Within 1 Year (1) 445.4 Long-term Debt (1) 911.8 Consolidated Long-term Debt, including Current Portion $ 1,357.2 Parent Company Debt, including Current Portion 959.
Slide 40: Jefferies – Reconciliation of GAAP to non-GAAP Financial Measures
Jefferies – Reconciliation of GAAP to non-GAAP Financial Measures Three and Nine Months Ended August 31, 2012 (Amounts in Thousands) Nine Months Ended Debt Accounting August 31, 2012 Three Months Ended Gain and (Excluding Debt August 31, 2012 Amortization of Debt Accounting Gain and Amortization of
Slide 41: Jefferies – Reconciliation of GAAP to non-GAAP Financial Measures
Jefferies – Reconciliation of GAAP to non-GAAP Financial Measures Three Months Ended February 29, 2012 and Three Months Ended May 31, 2012 (Amounts in Thousands) Three Months Ended Three Months Ended (Excluding Debt Amortization of Debt May 31, 2012 (Excluding Accounting Gain and Discount, Amortizat
Slide 42: Jefferies – Reconciliation of GAAP to non-GAAP Financial Measures
Jefferies – Reconciliation of GAAP to non-GAAP Financial Measures Three and Twelve Months Ended November 30, 2011 (Amounts in Thousands) Three Months Ended (Excluding Debt Twelve Months Ended Accounting Gain and (Excluding Debt Three Months Debt Accounting Certain Acquisition Twelve Months Debt Acco
Slide 43: Jefferies – Reconciliation of GAAP to non-GAAP Financial Measures
Jefferies – Reconciliation of GAAP to non-GAAP Financial Measures Three Months Ended August 31, 2011 (Amounts in Thousands) Three Months Ended August 31, 2011 Three Months (Excluding Certain Ended Certain Bache Bache Acquisition August 31, 2011 Acquisition Items Items) Net revenues $ 509,282 $ 52,50
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