Jefferies Exploring Options for Bache Unit

By Chelsey Dulaney 

Jefferies Group LLC said it is considering strategic options for the commodities and financial-derivatives unit it bought from Prudential Financial Inc. in 2011, while also reporting volatility and a tepid trading environment dragged down results in its November quarter.

Jefferies bought the Bache unit--one of the most storied names on Wall Street--in mid-2011 as the firm sought to grow from a securities-industry boutique focused on stock trading into a full-service investment bank that helps clients raise money and trade stocks, bonds and derivatives, where investors and big industry players transfer the risks of future price movements.

Jefferies said Tuesday that the business has faced growth and margin challenges, and the firm is in talks with third parties about a potential combination with a similar business to improve its competitive standing.

Jefferies also said it swung to a heavy loss in the quarter ended Nov. 30 as revenue fell 43.5% from a year earlier. Overall, Jefferies posted a loss of $92.4 million, compared with a year-earlier profit of $109.9 million.

Fixed-income revenue fell 73% in the quarter, hurt by the weak trading environment.

Investment-banking revenue slid 24%, as dampened capital markets activity led to the postponement of deals.

The New York securities firm, a unit of Leucadia National Corp., is considered by some to be a harbinger for how other Wall Street banks, particularly Goldman Sachs Group Inc. and Morgan Stanley, may be faring in trading, mergers and acquisitions and other businesses. Its quarter ends one month earlier than the other banks.

Write to Chelsey Dulaney at [e-mail]

Access Investor Kit for Leucadia National Corp.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US5272881047

Access Investor Kit for Prudential Financial, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US7443201022

Subscribe to WSJ: http://online.wsj.com?mod=djnwires