Japan’s Sumitomo Mitsui Financial Group (SMFG) is developing contingency plans for a possible takeover of U.S. investment bank Jefferies, according to a Financial Times report.
Jefferies shares jumped 6% in Frankfurt trading following the news. The bank’s stock has plummeted over 36% this year after steep losses tied to the collapse of auto parts supplier First Brands, which owed $715 million to Jefferies’ Leucadia Asset Management unit.
SMFG has assembled a team to act swiftly if Jefferies’ depressed share price creates an acquisition opportunity. However, no deal is imminent, and Jefferies leadership may resist selling at current valuations.
With a market cap of $8.17 billion, Jefferies remains significantly smaller than SMFG’s $124 billion valuation. The firm faces mounting investor lawsuits alleging fraud related to First Brands-linked funds and ongoing scrutiny over its lending practices after the failures of Market Financial Solutions and First Brands.