Sumitomo Mitsui Eyes Jefferies Takeover, Shares Rise 10%

Shares of Jefferies Financial Group surged approximately 10 percent in premarket trading on Tuesday after reports emerged that Japan's Sumitomo Mitsui Financial Group is preparing for a potential full takeover of the U.S. investment bank. The development, detailed in a Financial Times article citing people familiar with the matter, comes amid Jefferies' extended stock decline and highlights growing interest from Japanese financial institutions in overseas expansion.

Sumitomo Mitsui Financial Group, Japan's second-largest banking group with a market capitalization of about $124 billion, has assembled a small internal team to evaluate the opportunity should Jefferies' share price continue to weaken. The Japanese firm first acquired nearly a 5 percent stake in Jefferies in 2021 and increased its position to up to 20 percent last September through a $912 million investment by its banking subsidiary, Sumitomo Mitsui Banking Corp. The two companies recently launched a joint venture in Japan focused on equities, which sources described as a test case for potential integration and due diligence.

Jefferies, an independent investment bank competing with major Wall Street players, has seen...