UPDATE, 11/13/12, 5:35 p.m. EST: Covington & Burling corporate partner Jack Bodner is advising UBS Securities in its role as financial adviser to Leucadia’s board of directors.

Holding company Leucadia National Corporation said Monday it will acquire the investment bank Jefferies Group, Inc.—in which it already holds a 28.6 percent stake—in an all-stock transaction worth roughly $2.8 billion.

Shareholders in New York-based Jefferies will receive 0.81 Leucadia shares for each Jefferies share. Once the deal closes, which is expected to occur in the first quarter of 2013, Jefferies shareholders will hold 35.3 percent of Leucadia stock. Shareholders of both Jefferies and Leucadia must approve the transaction for it to be consummated.

The deal would make Jefferies the largest investment for New York-based Leucadia, which also has holdings in the mining, telecommunications, and health care industries, among others. In announcing the deal, the two companies said a combination puts them in a strong position for growth going forward.

Jefferies faced a crisis last year in the wake of the collapse of its rival, MF Global Holdings Ltd., as the investment bank’s own shares plummeted amid concerns that its balance sheet would also be left exposed by sovereign debt in Europe. Leucadia bought 1 million Jefferies shares last November in an effort to calm investors, according to Reuters. In its 2011 annual report, Leucadia lauded Jefferies management for a speedy and transparent response to market panic that it said helped the investment bank right the ship.

Weil Gotshal & Manges is advising Leucadia on the acquisition. The firm’s past work for Leucadia includes advising on the $825 million sale in 2006 of WilTel Communications Group, and on the $480 million sale of a 30 percent stake in a copper mining project in 2010 to Inmet Mining Corporation.

Weil’s team on the Jefferies deal includes M&A partners Andrea Bernstein and Matthew Gilroy, as well as tax partners Mark Hoenig and Chayim Neubort.

Proskauer Rose is legal counsel to Leucadia’s board of directors, led by restructuring chair Martin Bienenstock, and M&A partners Lorenzo Borgogni and Arnold Jacobs. Bienenstock, a former Weil partner who left that firm for now defunct Dewey & LeBoeuf in 2007, advised a joint venture between Leucadia and Berkshire Hathaway on its takeover of distressed lender Finova in 2001, while he was still at Weil. (Bienenstock joined Proskauer from Dewey earlier this year.)
 
Morgan, Lewis & Bockius is representing Jefferies on the sale led by business and finance partners R. Alec Dawson, Sheryl Orr, and Robert Robison. Securities partner Stephen Farrell, tax partner Kenneth Kail, and business and finance partner Richard Petretti are also advising.

Morgan Lewis securities senior counsel Lloyd Feller is the former general counsel of Jefferies, having rejoined the firm from Jefferies in 2011. Former Wilmer Cutler Pickering Hale & Dorr partner Michael Sharp is now general counsel at Jefferies.

Meanwhile, Wachtell, Lipton, Rosen & Katz is representing the transaction committee of the Jefferies board with a team led by corporate partners Edward Herlihy and David Shapiro. Compensation and benefits partner Jeannemarie O’Brien is also advising, as are tax partners Jodi Schwartz and Joshua Holmes.

Cleary Gottlieb Steen & Hamilton corporate partner Victor Lewkow is advising Citigroup Global Markets in its role as financial adviser to the transaction committee.