Jefferies in talks for strategic tie-up of commodities unit Bache

Jefferies Group LLC is exploring strategic options for its commodities and financial derivatives unit, including a tie-up with another similar business, it said on Tuesday December 16.

The company, which acquired the unit from Bache in 2011, said it was facing growth and margin challenges and that it was looking for a new combination that would improve its competitiveness.

“As a result of the growth and margin challenges we have recently faced in the Bache business we acquired in mid-2011, we are pursuing strategic alternatives for this business, and discussions with third parties in this regard are already under way,” the company’s management said in a statement.

“We are focused on the potential combination of Bache with another similar business that improves the combined businesses’ competitive standing and margin,” it added.

Jefferies Bache is a category II member of the London Metal Exchange and a clearing member of all major exchanges.
 
It is also active in precious metals, foreign exchange, exchange-traded futures and options in commodities and financials, as well as providing global execution and clearing services.

Jefferies said the fourth quarter has been “very challenging,” with heightened volatility from mid-September through mid-November and a tepid trading environment throughout the period.

It reported a fourth-quarter loss of $92.4 million, compared with a profit of $109.9 million in the same period of 2013.

This includes a $52 million goodwill write-down and an $8 million write-down related to the Bache unit.

Jefferies is a wholly-owned subsidiary of Leucadia National Corp.

Andrea Hotter
ahotter@metalbulletin.com
Twitter: @andreahotter