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.
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First mayo- shamwow
who told you this, gaspo?
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?
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.
Any sale would be ruled a fraudulent conveyance in BK.
issue debt…good one…rofl
They’re called BONDS…They need capital, remember.
Hearing of mass defecations all over trading floors at LEH ala Merrill Lynch.
They’re called BONDS…They need capital, remember.
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.)
LEH not going to make it to the weekend at this rate. That pre-announce better be good.
I ask you, who the fuck is going to buy bonds from LEH? Seriously?
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.
Too long, didn’t read.
Doesn’t LEH have access to the Fed window?
Pakistan Sovereign Warlord Trust acquiring LEH.
related, Thain in talks with Kim Jong Il.
-retail
MAYO
Too long, didn’t readberger.
@15,
contrary to common perception, you have to post collateral to borrow money from the Fed.
@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
@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.
13 Combo of US Trust and NB would be like (even though I hate to say the word) putting mayo on pastrami.
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).
“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!
let’s bail them out and rename our country “The United States of France”
@20: Wells Fargo is doing ok. Of course they are way too smart to touch this piece of poo.
@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.
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.
“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!
MS for LEH at the magical number for failing brokers: 10.
And Fuld folds, like the angry hockey bitch dad he is.
Ebay
Ebay
@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.
hahah this post got picked up by flyonthewall
and then bberg
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.
Hate to sound so dumb, but how exactly does a firm sell half of it’s asset managment business?
50% stake or 51/49 for control.
@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).
Would they sell the Neuberger half or the Berman half? Which half do you think is worth more?
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.
@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.
are the traders defecting or defecating? either way lehman’s knee deep in s***
Two words – Epic Fail
Neuberger, listed first, more letters.
good read
@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 …
are the traders defecating or defecting? either way Lehman’s knee deep in s***
Save Lehman Bake Sale – Tomorrow morning 8 AM
@39….post of the day
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¢.
i heard lehman traders are now market making their gym bags next to dudes selling channel sunglasses, holex watches, and gucchee handbags..