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Only saw this just now, was released on Feb. 19:

Doing a share issuance of 2 JEF shares per HomeFed (HOFD) share to buy the common stock of HomeFed not already owned by Jefferies. They imply an immediate pre-tax gain based on placing a market value on their current stake:

"The Proposed Transaction would involve the issuance of approximately 9.25 million shares of Jefferies common stock, worth approximately $194.0 million at Friday’s closing share price. Upon completion of the proposed transaction, Jefferies’ total post-transaction carrying value of HomeFed’s net assets would be approximately $651.0 million, reflecting a pre-tax gain of approximately $119 million that would result from revaluing our 70.1% historical ownership interest when Jefferies consolidates HomeFed."

I wondered why they would issue shares at prices below tangible book value (TBV) to do this, but they address it by saying they will repurchases shares to offset the dilution of the issuance. Presumably any large HomeFed holders will get some tax benefits from a share issuance and can continue to participate in upside (if any):

"Rich Handler and Brian Friedman, CEO and President, respectively, of Jefferies, said “We generally would not issue shares at these prices, but we would do so here to facilitate a strategic transaction that might otherwise not be achievable. As a direct offset to those potentially issued shares, Jefferies’ Board of Directors has, conditioned on the closing of the Proposed Transaction, authorized the repurchase of 9.25 million shares in the open market. This share-repurchase approval is incremental to the $500 million share repurchase recently approved by Jefferies’ Board of Directors. We believe this proposed transaction makes good sense for both Jefferies and HomeFed, as it will allow Jefferies to consolidate HomeFed for tax purposes (which will avoid an extra layer of taxes as HomeFed monetizes its assets), affording greater flexibility as to the timing and form of maximizing value over time.”

Assuming the offsetting repurchases are done at or below TBV, this will have the net effect of immediately moving up book-value of the HomeFed holding. Based on my calcs (351,275,000 diluted shares and the reported $119M increase), this should add very approximately $0.33 per share to TBV, or about a 1.5% increase. A small move, but one in a series. Hopefully they will add up over time.
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