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Lehman Contacting Rivals For Lifeline, Bankers Say

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The Associated Press

The Tampa Tribune

Published: September 12, 2008

NEW YORK - Lehman Brothers has approached other major financial institutions about a potential acquisition or investment in the battered securities company, people close to the situation said Thursday.

The nation's No. 4 investment bank has been casting a wide net to find a potential buyer for all or part of the 158-year-old company, bankers and executives at other financial companies said Thursday.

The bankers and executives asked not to be named because they were not authorized to comment publicly.

The Washington Post reported late Thursday that the Treasury Department and the Federal Reserve are arranging a sale through a consortium of private firms. It said the deal has not been finalized, but quoted unnamed sources as saying it could be announced this weekend.

Government officials who asked for anonymity because of the sensitivity of the ongoing discussions cautioned that a number of options were still being explored and that no decisions had been reached on how any deal to rescue Lehman would be structured.

Randy Whitestone, a spokesman for Lehman, declined to comment.

Bank of America Corp., France's BNP Paribas, Deutsche Bank AG and Britain's Barclay's Plc have been mentioned this week as potential buyers of Lehman, which on Wednesday outlined a plan to sell and spin off assets to raise money.

The bankers and executives said Lehman's leader, Richard Fuld, also has been stepping up talks with private equity firms such as Kohlberg Kravis Roberts & Co. and Bain Capital to acquire its investment management division, which includes Neuberger Berman.
Lehman Brothers Holdings' shares tumbled again Thursday after its rescue plan got a dismal reception from Wall Street and analysts' reports cast doubt that the investment bank can survive.

Its shares fell $2.62 to $4.63 - down more than 93 percent from their 52-week high of $67.73.

Other financial stocks were also pulled lower Thursday amid fear that banks and brokerages have more pain to go through before the year-old credit crisis begins to wane. Merrill Lynch & Co. shares fell 13 percent and Goldman Sachs Group dropped almost 2 percent.

On Wednesday, Lehman Brothers outlined a blueprint to sell off its well-respected investment management unit and spin off its commercial real estate assets. The strategy is part of a last-ditch effort to rescue the investment bank from bad bets on real estate-related holdings that have already laid low other storied Wall Street companies.

Lehman Chief Executive Officer Fuld, 62, the longest serving CEO on Wall Street, also said Lehman would examine all other options - including a sale of the company he joined right out of college.

"We remain committed to examining all strategic alternatives to maximize shareholder value," Fuld said in a conference call Wednesday.

Analysts said investors had hoped to see a solid plan in place to offset almost $6.5 billion of losses during the past two quarters.

"Management did not successfully put to rest the issues that had been pressuring the stock," Goldman Sachs analyst William Tanona wrote in a research report.

Investors were discouraged that no specific buyer had been named. Lehman began pitching a deal to private-equity firms two months ago. Analysts think the sale could fetch about $3 billion.

The company is also taking a big bet that a spinoff of its commercial real estate assets will get a strong market reception in early 2009. The new entity will be called Real Estate Investments Global and will be run by independent management.

Wall Street remains skittish about financial stocks since a run on Bear Stearns caused the government to orchestrate its sale to JPMorgan Chase & Co. in March. Lehman, the biggest U.S. underwriter of mortgage-backed securities, was automatically scrutinized.

Global banks have lost more than $300 billion from write-downs since the housing slump evolved into a full-blown credit crunch.

Analysts think that trying to engineer a reconstruction of Lehman Brothers will be a tough proposition considering the environment. The current financial crisis shows no sign of ending soon, credit conditions remain tight and big acquisitions are rare.

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