Jefferies shares surged 10% in premarket trading after reports surfaced that Japan’s Sumitomo Mitsui Financial Group (SMFG) is preparing for a possible takeover. SMFG, which holds a 20% stake, has formed a team to explore a move if Jefferies’ stock dips further.
The U.S. investment bank faces scrutiny over lending practices and risks tied to collapsed entities like Market Financial Solutions and First Brands. Its stock has fallen 36% this year, creating a $8.2 billion market cap. SMFG declined to comment on rumors, calling Jefferies an important partner.
Investors have sued Jefferies over alleged fraud linked to First Brands, though the bank denies wrongdoing. Meanwhile, Jefferies countersued Western Alliance over a disputed $126.4 million payment. The bank expects losses from Market Financial Solutions to remain under $20 million.
Jefferies will report earnings soon, with analysts predicting profit growth driven by rebounding mergers and acquisitions. Executive commentary on legal disputes and stock recovery plans will be closely watched.
Any deal faces hurdles, including U.S. regulatory scrutiny and cross-border challenges. SMFG increased its stake to 20% in 2025, aiming to bolster its global securities business. A full takeover remains uncertain.