A major Japanese banking corporation is reportedly developing strategies for a potential acquisition of Wall Street investment firm Jefferies, according to a Financial Times report released Tuesday.
Sumitomo Mitsui Financial Group has assembled a dedicated team to ensure readiness should Jefferies’ declining stock value create an acquisition opportunity, sources familiar with the situation told the Financial Times.
Following the report’s publication, Jefferies stock jumped 6% during Frankfurt trading sessions.
The investment bank’s share value has dropped more than 36% year-to-date, building on significant losses from the previous year when a subsidiary connected to Jefferies’ asset management division became entangled in the First Brands auto parts supplier bankruptcy.
Neither Reuters nor other outlets could immediately confirm the Financial Times report. Jefferies representatives did not respond to requests for comment, and SMFG officials were unavailable for immediate response.
According to the report, any potential move by the Japanese financial giant would not happen immediately, and uncertainty remains whether Jefferies leadership would agree to sell while share prices remain suppressed.
The independent investment bank, which rivals some of Wall Street’s largest institutions, currently holds a market value of $8.17 billion based on LSEG data. In comparison, SMFG maintains a market capitalization of approximately $124 billion.
Jefferies faces intense examination regarding its lending practices and risk management following the failures of British lending institution Market Financial Solutions and First Brands.
The investment firm currently faces investor lawsuits alleging fraudulent practices in connection with a fund tied to First Brands, which owed approximately $715 million in receivables to Jefferies’ Leucadia Asset Management division.
