Jefferies enters into stock repurchase agreement with independent third party broker

Jefferies Financial Group Inc (NYSE:JEF), formerly known as Leucadia National Corporation, has earlier today posted a SEC filing stating that, on April 26, 2019, it entered into a stock repurchase agreement with an independent third party broker.

Under the agreement, the broker is authorized to repurchase up to 9.3 million shares of Jefferies’ common stock on Jefferies’ behalf during the period following the closing of the merger with HomeFed Corporation through July 3, 2019, subject to certain price, market and volume constraints specified in the agreement. The Agreement was established in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The shares will be purchased pursuant to Jefferies’ previously announced share repurchase program and in a manner consistent with applicable laws and regulations, including the provisions of the safe harbor contained in Rule 10b-18 under the Act.

The share repurchase was indicated in Jefferies’ press release about the deal to acquire the remaining 30% interest in HomeFed Corporation – that announcement was made about two weeks ago. Back then, Jefferies said its Board of Directors and the Special Committee of the Board of Directors of HomeFed had approved a definitive merger agreement under which Jefferies will acquire the shares of HomeFed common stock that it does not already own.

Under the terms of the transaction:

• HomeFed stockholders will be given the right to elect to receive either cash or shares of Jefferies common stock in exchange for their HomeFed shares.

• If a HomeFed stockholder elects to receive cash, that stockholder will receive $38.00 in cash for each share of HomeFed common stock.

• If a HomeFed stockholder elects to receive shares of Jefferies’ common stock and the Jefferies’ average share price (as defined below) is equal to or less than $21.00 per share, that stockholder will receive two shares of Jefferies common stock for each share of HomeFed common stock.

• If a HomeFed Stockholder elects to receive shares of Jefferies’ common stock and the Jefferies’ average share price is more than $21.00 per share, that stockholder will receive less than two shares of Jefferies common stock for each share of HomeFed common stock, with the exchange ratio being calculated by dividing $42.00 by the Jefferies’ average share price. For example, if the Jefferies’ average share price is $22.00, the exchange ratio would be 1.9091 and any HomeFed stockholder electing to receive shares of Jefferies’ common stock would receive 1.9091 shares of Jefferies common stock.

• If a HomeFed stockholder makes no election, that stockholder will be deemed to have made a cash election if the Jefferies’ average share price is equal to or less than $19.00 per share or a share election if the Jefferies’ average share price is more than $19.00 per share.

The Jefferies’ average share price shall be calculated as the volume-weighted average price of a share of Jefferies common stock for the ten consecutive trading days ending on the trading day that is three trading days before the date of the HomeFed stockholders meeting at which HomeFed stockholders will vote on the transaction.

The transaction, which is expected to close during the third quarter of 2019, is subject to customary closing conditions, including approval by a majority of the HomeFed stockholders (excluding Jefferies or its affiliates).

In addition, concurrently with the execution of the merger agreement, Jefferies entered into a voting agreement with HomeFed, pursuant to which Jefferies has agreed to vote all of the shares of HomeFed common stock owned by it in favor of the adoption of the merger agreement.

Jefferies’ Board of Directors has approved the repurchase of shares in the open market to offset the issued shares for the transaction, which is on top of the $500 million share-repurchase approval already in place. The transaction would involve the issuance of as many as 9.3 million shares of Jefferies common stock, worth approximately $189 million based on the closing price of Jefferies common stock on April 12, 2019. Upon completion of the transaction, Jefferies’ total post-transaction carrying value of HomeFed will be approximately $631 million.