Leucadia National Corp., New York City-based holding company, has agreed to pay $70 million to settle a series of investor class action lawsuits challenging its nearly $3 billion stock swap deal for Jefferies Group Inc. The deal created a $9 billion conglomerate with real estate, health care and other holdings. The settlement will resolve seven class actions filed in New York and Delaware by former stockholders of global investment banking firm Jefferies Group. The suits claimed, among other things, that instead of focusing on the best deal possible, Jefferies’ then-CEO and Chairman Richard Handler was part of a strategy to spur an inadequate transaction in order to realize his career goal of becoming the head of Leucadia.
If approved by the court, the settlement will resolve all claims in Delaware and release the claims in New York, which had been stayed pending discovery in the Delaware litigation. The settlement was announced in November 2012, and Leucadia, which had owned a nearly 30 percent stake in the target, acquired the rest of Jefferies for what the complaint says was an implied value of $17.66 per share. It appears that Jefferies became Leucadia’s largest operating subsidiary, and the target’s shareholders got 0.81 shares of Leucadia for every Jefferies share they owned. Reportedly, the transaction put more than 35 percent of the stock of Leucadia — which holds a diversified portfolio of beef processing, manufacturing, gaming entertainment, real estate activities, medical product development and winery operations — in the hands of Jefferies shareholders.
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