Investors who heard a well-timed research report from Jefferies Financial Group Inc. could have nearly doubled their money in a single day.
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(Bloomberg) — Investors who heard a well-timed research report from Jefferies Financial Group Inc. could have nearly doubled their money in a single day.
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Charles Brennan, a London-based analyst at Jefferies, predicted in a note to clients late Wednesday that the wave of takeovers in the European technology industry would continue. It included a helpful diagram of possible targets in the space, with UK enterprise software developer Micro Focus International Plc shown as the second-most likely candidate to get bought.
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The next evening, Canada’s Open Text Corp. said it would buy Micro Focus for about $6 billion including debt. The offer price of 532 pence per share was a 99% premium to the British target’s last closing price.
When London trading opened Friday, Micro Focus predictably soared the most on record, touching close to the bid price. Anyone who bought shares after reading the Jefferies report would have nearly doubled their money in roughly 24 hours.
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Another part of Jefferies was a financial adviser to Micro Focus on the transaction, in addition to its recently-won role as a corporate broker to the software company. The bank worked alongside Goldman Sachs Group Inc., lead financial adviser to Micro Focus, and the firm’s longtime broker Numis Corp., according to a filing Friday.
Jefferies had only been appointed as joint corporate broker to Micro Focus in early August.
Banks have so-called Chinese walls preventing information sharing between different parts of the business to ensure that research analysts are not aware of takeovers the firm is advising on. The Jefferies research team has now gone restricted on Micro Focus, according to data compiled by Bloomberg.
A representative for Jefferies declined to comment.