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
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