The deal under consideration at Lehman Brothers is a sale of about half of Neuberger Berman, according to sources familiar with the matter. Lehman is looking at a huge writedown and has resorted to attempting to sell its valuable asset management business because it is otherwise unable to raise capital.
The firm does not want to sell off the entire Neuberger business because of fears about its profit potential without the asset managers. The market currently values the rest of Lehman's activities at something less than zero, with Lehman's market cap below what most analysts believe would be the value of Neuberger.
Lehman has been told by the ratings agencies that it cannot sell the entirety of its asset management business without facing an immediate ratings downgrade, a source familiar with the matter tells DealBreaker. Selling around half the business would bring in badly needed cash without killing profits. Any downgrade of Lehman by the ratings agencies would raise the cost of capital at Lehman and would likely propel the stock even further downwards.
We also hear that all other attempts to raise capital have been suspended until the deal to sell part of Neuberger is announced. Lehman is said to believe that it will have far better results in the capital markets if it looks for a capital injection after the deal is announced.
Posted by guest , Sep 09, 2008 3:27PM
First mayo- shamwow
Posted by guest , Sep 09, 2008 3:28PM
who told you this, gaspo?
Posted by guest , Sep 09, 2008 3:34PM
Question
Why buy half of NB now when you may be able to buy all of it (for the same price) a week from now?
Posted by guest , Sep 09, 2008 3:37PM
Why sell it now? The stock is already priced in LEH without Neuberger Berman. Keep NB, (esp. since its your only real money making asset) and issue debt. Like I said, the shares are already diluted to reflect a NB sale.
Posted by guest , Sep 09, 2008 3:38PM
Any sale would be ruled a fraudulent conveyance in BK.
Posted by guest , Sep 09, 2008 3:38PM
issue debt...good one...rofl
Posted by guest , Sep 09, 2008 3:39PM
They're called BONDS...They need capital, remember.
Posted by guest , Sep 09, 2008 3:39PM
Hearing of mass defecations all over trading floors at LEH ala Merrill Lynch.
Posted by guest , Sep 09, 2008 3:40PM
They're called BONDS...They need capital, remember.
Posted by guest , Sep 09, 2008 3:42PM
This just in from Boone Pickens - oil not to go below much $100 and thinks a return to $150 before year end probable.
Could that be because his $6 billion dollar fund is now about $2.5 billion (last substantial bet going long oil @ $125.)
Posted by guest , Sep 09, 2008 3:42PM
LEH not going to make it to the weekend at this rate. That pre-announce better be good.
Posted by blndebnker , Sep 09, 2008 3:42PM
I ask you, who the fuck is going to buy bonds from LEH? Seriously?
Posted by guest , Sep 09, 2008 3:43PM
Why haven't they fired Fuld, he's clinging to irrational value assumptions, doesn't matter what he thinks LEH is worth its what the market thinks, board should fire him and sell it for whatever they can get to a publicly traded bank that will eliminate the capital concerns.
Just make it a stock for stock deal so that shareholders can hold on and get the actual value from the eventual rise in the share price of the acquirer once the credit crisis is over and financial firms are fairly valued. Maybe Bank of America, then they would own U.S. Trust and Neuberger.
Posted by guest , Sep 09, 2008 3:44PM
Too long, didn't read.
Posted by guest , Sep 09, 2008 3:46PM
Doesn't LEH have access to the Fed window?
Posted by guest , Sep 09, 2008 3:47PM
Pakistan Sovereign Warlord Trust acquiring LEH.
related, Thain in talks with Kim Jong Il.
-retail
Posted by guest , Sep 09, 2008 3:47PM
MAYO
Posted by guest , Sep 09, 2008 3:47PM
Too long, didn't readberger.
Posted by guest , Sep 09, 2008 3:47PM
@15,
contrary to common perception, you have to post collateral to borrow money from the Fed.
Posted by guest , Sep 09, 2008 3:50PM
@13, almost all public banks are currently having capital concerns. Ones that aren't have recently absorbed huge acquisitions (BSC or CFC). If a bank fit your bill they would do what #3 suggests
Posted by guest , Sep 09, 2008 3:51PM
@19,
True but they now accept sh*t for cash. Someone (or multiples) was at the window this morning. Posted $36BN in MBS, Fed accepted $20BN.
Posted by guest , Sep 09, 2008 3:52PM
13 Combo of US Trust and NB would be like (even though I hate to say the word) putting mayo on pastrami.
Posted by guest , Sep 09, 2008 3:54PM
seekingalpha:
http://seekingalpha.com/news/market_currents/post/6507
There are rumors Goldman Sachs (GS) submitted an $11.50 bid for Lehman (LEH -41% to $8.40).
Posted by guest , Sep 09, 2008 3:54PM
"Lehman has been told by the ratings agencies that it cannot sell the entirety of its asset management business without facing an immediate ratings downgrade"... Now, Im pretty ignorant on all things high finance, though curious, if you allow ... anyhow, could someone explain to me, why this statement makes sense? are they putting any weird or not so weird behavioral-finance-stuff into their models? sell it half or full for discounted future cash flows - what's the difference? thanks in advance!
Posted by guest , Sep 09, 2008 3:55PM
let's bail them out and rename our country "The United States of France"
Posted by guest , Sep 09, 2008 3:56PM
@20: Wells Fargo is doing ok. Of course they are way too smart to touch this piece of poo.
Posted by guest , Sep 09, 2008 3:58PM
@24. If they sell all of NB, the market has valued the rest of the firm at zero, actually...less than zero.
They are saying you can't sell your last solid earning asset and expect to maintain your current ratings.
Posted by bank_teller , Sep 09, 2008 3:58PM
looking like a better deal every minute for the NB employees to buy themselves off, toss the bankers & traders, and maybe keep or sell some of the real estate. 10K seems to say they own the HQ, although not sure if it has a mortgage.
Posted by guest , Sep 09, 2008 3:59PM
"Lehman has been told by the ratings agencies that it cannot sell the entirety of its asset management business without facing an immediate ratings downgrade"... Now, Im pretty ignorant on all things high finance, though curious, if you allow ... anyhow, could someone explain to me, why this statement makes sense? are they putting any weird or not so weird behavioral-finance-stuff into their models? sell it half or full for discounted future cash flows - what's the difference? thanks in advance!
Posted by guest , Sep 09, 2008 4:00PM
MS for LEH at the magical number for failing brokers: 10.
And Fuld folds, like the angry hockey bitch dad he is.
Posted by guest , Sep 09, 2008 4:00PM
Ebay
Posted by guest , Sep 09, 2008 4:00PM
Ebay
Posted by guest , Sep 09, 2008 4:01PM
@24:
My guess is that the rating agencies see NB's cash flow as postitive and less volatile compared to the rest of the business.
There is still a ton of toxic waste assets on and off LEH's books. Once the good cash flows are gone there is nothing left to absorb future write down shocks.
Posted by guest , Sep 09, 2008 4:02PM
hahah this post got picked up by flyonthewall
and then bberg
Posted by guest , Sep 09, 2008 4:05PM
Maybe the problem here is, the realization that selling half of NB, doesn't give you the capital you need. They do that and they are putting a ton of faith in another capital raise post NB sale. How is that? Firm is weakened by the sale of any % of NB.
Posted by guest , Sep 09, 2008 4:09PM
Hate to sound so dumb, but how exactly does a firm sell half of it's asset managment business?
Posted by guest , Sep 09, 2008 4:11PM
50% stake or 51/49 for control.
Posted by guest , Sep 09, 2008 4:13PM
@24: Good question. Two possibilities: 1. The ratings agencies don't know what they fuck they are doing (very likely). 2. As a distressed seller LEH will have to sell for less than discounted cash flow (also likely).
Posted by guest , Sep 09, 2008 4:26PM
Would they sell the Neuberger half or the Berman half? Which half do you think is worth more?
Posted by guest , Sep 09, 2008 4:54PM
my friends at NB have said they've been trying to buy it for MONTHS now. It's gone from "you can have it...no you can't...yes you can...." with the price a moving target, based on how negotiations with outside firms have gone. Clearly no hand (or a too-light hand) on the tiller.
Posted by guest , Sep 09, 2008 5:11PM
@22
I agree – B of A’s acquisition of U.S. Trust led to mass defections at UST, which is exactly what you don’t want to happen if they were to acquire N&B.
Posted by guest , Sep 09, 2008 5:14PM
are the traders defecting or defecating? either way lehman's knee deep in s***
Posted by guest , Sep 09, 2008 5:15PM
Two words - Epic Fail
Posted by guest , Sep 09, 2008 5:24PM
Neuberger, listed first, more letters.
Posted by guest , Sep 09, 2008 5:26PM
good read
Posted by guest , Sep 09, 2008 6:55PM
@38: 24 here. thanks for your answer (also thx to the others). that's what i thought, too. regarding 2. though it feels sw harsh of the agencies to assume that upfront. this whole rating business doesn't feel truly kosher ... the agencies argued the same way regarding the supposed lack of future business of the "mono"lines some time ago. the argument felt rather wrong then ...
Posted by guest , Sep 09, 2008 9:49PM
are the traders defecating or defecting? either way Lehman's knee deep in s***
Posted by guest , Sep 09, 2008 10:00PM
Save Lehman Bake Sale - Tomorrow morning 8 AM
Posted by guest , Sep 09, 2008 10:07PM
@39....post of the day
Posted by guest , Sep 10, 2008 12:57AM
Neuberger sounds like 'new burger', something I might like to eat. Berman sounds like 'burr, man' something that sticks to your pants. I think New Burger is worth more, like 5¢.
Posted by guest , Sep 23, 2008 7:40PM
i heard lehman traders are now market making their gym bags next to dudes selling channel sunglasses, holex watches, and gucchee handbags..