Jefferies to Buy Prudential Commodities for $430 Million

Jefferies Group Inc. (JEF), the investment bank that’s been expanding since the financial crisis, agreed to acquire Prudential Bache’s Global Commodities Group for about $430 million.

The business, now owned by Prudential Financial Inc. (PRU), will be called Jefferies Bache after the acquisition is completed in the third fiscal quarter, New York-based Jefferies said today in a statement.

Jefferies Chairman and Chief Executive Officer Richard B. Handler, 49, has been adding employees as competitors cut staff in the aftermath of Lehman Brothers Holdings Inc.’s collapse in 2008. The firm increased its headcount by 17 percent to 3,084 employees in the 11 months through Nov. 30 to boost its share of mergers-and-acquisition deals. Last month it reported first- quarter profit rose 21 percent as trading and asset-management revenue climbed.

Prudential’s commodities group, which had revenue of $220 million last year, is profitable, Jefferies said in the statement. Jefferies Bache will have more than 400 employees in New York, Chicago, London, Hong Kong and Hamburg. Patrice Blanc will be chairman and CEO of the business.

Jefferies has been expanding its fixed-income business, which increased revenue by 58 percent to $318.1 million in the three months ended Feb. 28 from the three months ended March 30 last year. The firm appointed Yvonne Downs, chief operating officer of Jefferies Futures Division, to work with Blanc to build-out the futures and options trading and clearing business on the financial and commodities markets, Jefferies said in January.

Prudential’s Focus

Prudential has been phasing out securities-related businesses as it focuses on life insurance and retirement products in Japan and the U.S. The Newark, New Jersey-based insurer wound down its institutional-brokerage unit in 2007. Prudential also sold its minority stake in a securities- brokerage unit to Wells Fargo & Co. (WFC) for $4.5 billion in 2009. The San Francisco-based bank acquired the brokerage with its 2008 takeover of Wachovia Corp.

“We have focused on businesses that are core to our mission, and where we believe we can excel,” Prudential CEO John Strangfeld said in the company’s most recent annual report. Key drivers of last year’s earnings were from the firm’s international insurance business, retirement-products unit and improvement at its U.S. insurance business, he said.

Prudential agreed in September to buy Star Life Insurance Co. and Edison Life Insurance Co. for $4.8 billion from American International Group Inc. (AIG), adding to Japanese business.

To contact the reporters on this story: Laura Marcinek in New York at lmarcinek3@bloomberg.net; Noah Buhayar in New York at Nbuhayar@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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