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Jefferies Financial Group Inc (NYSE:JEF) stock surged Wednesday afternoon following a report by Nikkei Asia that Japan’s Sumitomo Mitsui Financial (NYSE:SMFG) is considering raising its stake in the group.
Sumitomo Mitsui Financial Group (SMFG) President and CEO Jun Ohta is said to have told Nikkei Asia that it is considering upping its holding as the two businesses expand their partnership beyond the U.S.
Jefferies shares are currently up 13% on the news, trading around the $38.70 level. It hit a high of $40.80 per share in the immediate aftermath.
Ohta was quoted as saying that they have “decided to move toward increasing our holdings,” although there were no details provided regarding the size or timing of the investment.
He suggested the decision would come once SMFG undertakes discussions with Jefferies and U.S. regulators. However, Ohta told Nikkei Asia that he hoped to make Jefferies an equity-method affiliate, which involves a stake between 20% and 50%.
In July 2021, SMFG acquired an almost 5% stake in Jefferies for about ¥40 billion through Sumitomo Mitsui Banking Corp. In addition, the companies have cooperated in certain areas, such as mergers and acquisitions in the U.S., while it has also recently sought joint deals in Europe, with further plans in Asian markets.
The move would help SMFG expand its overseas brokerage business.
