Leucadia to sell 48% of National Beef, be renamed Jefferies Financial Group
Leucadia National announced strategic transactions involving several of its investee companies, a proposal to change the name of the corporation to Jefferies Financial Group, a new share buyback authorization and preliminary results for its first quarter 2018. Leucadia has entered into a definitive agreement to sell 48% of National Beef to Marfrig for approximately $900M in cash, reducing Leucadia's ownership in National Beef to 31% and allowing Leucadia to deconsolidate National Beef and simplify Leucadia's income statement and balance sheet. The estimated pre-tax gain that will be recognized as a result of this transaction is $800M-$850M. Leucadia expects to receive an additional estimated $150M in distributions prior to the closing, representing recent profits plus a true-up to the debt number set in the enterprise valuation associated with the sale. Marfrig has also agreed to acquire a further 3% of National Beef from other shareholders and will own 51% of National Beef. Leucadia will continue to have two board seats and a series of other rights in respect of its continuing equity interest, with a lockup period of five years and thereafter fair market value liquidity protections. This transaction is subject to limited conditions and is expected to close in the second quarter. Leucadia has also agreed to sell 100% of its equity interests in Garcadia and its associated real estate to Leucadia's current partners, the Garff family. The sale price for Leucadia's interests, based on a $675M enterprise valuation, is a net $425M, payable $375M in cash and $50M in redeemable preferred equity. Leucadia will recognize a pre-tax gain of about $220M. This transaction is expected to close in the third quarter of 2018. Leucadia has cumulatively invested $321M in Garcadia since 2006 and has received cash distributions of $394M to date prior to the net $425M sale proceeds plus the pre-closing earnings distribution. To recognize the change in Leucadia's reality that has advanced considerably through the right-sizing and deconsolidation of Leucadia's interest in National Beef, Leucadia's Board of Directors will ask shareholders at the upcoming annual meeting to change the holding company name of Leucadia National Corporation to Jefferies Financial Group. "Our renamed Jefferies Financial Group Inc. will be well-capitalized, with approximately $11 billion of shareholders' equity, or $31.20 per share, and $1 billion of parent company long-term debt, pro forma for the National Beef and Garcadia deals, as of year-end 2017. It is anticipated that our new ticker on the NYSE will be JEF, effective post-approval of our name change," the company stated.