Leucadia buying investment banker Jefferies Group

The transaction will make Jefferies the largest business for a diversified holding company with more than $9 billion in assets, ranging from lumber and plastics manufacturers, energy production facilities and an oil and gas contract driller to medical product developers, a hotel and casino, wineries and other real estate interests.

Leucadia already held a 28.6 percent stake in Jefferies, which will still operate as a full-service investment banking firm. After the deal closes, 35.3 percent of Leucadia's stock will be owned by Jefferies Group Inc. stockholders.

As part of the deal, Jefferies Chairman and CEO Richard Handler will become the CEO of Leucadia. Leucadia's Chairman and CEO Ian Cumming will retire but remain on the board. Leucadia President Joseph Steinberg will become chairman.

Handler emphasized that the deal is being done at a time of significant strength for both companies and said its aim is to create more long-term value.

"In Jefferies, Leucadia is acquiring a strong engine to be its lead operating company for the future," he said on a conference call. "And Jefferies is becoming part of a larger platform, from which to continue its growth."

Combining the two, he said, provides better protection "from any treacherous quarters that may surface" in the markets.

Jefferies' stockholders will receive 0.81 of a share of Leucadia stock for each share they hold. This doesn't include Leucadia's current 28.6 percent of Jefferies outstanding stock.