Lehman's Many Suitors
A number of buyers possible for investment firm.
Lehman Brothers (LEH), the fourth-largest US securities firm, has been pegged as a takeover target for months. All it lacks is suitors banging on the door and waving money.
But the Korea Development Bank may ride to the rescue.
A spokesman for the state-run bank told Reuters, "We are studying a number of options and are open to all possibilities, which could include Lehman."
Korea Development Bank had considered taking a 50% stake in Lehman, but the deal stalled over price, the Financial Times reported last week.
Despite the takeover chatter, Lehman's stock declined about 3.13% to $13.98 a share in early trading Monday. The 52-week range is $12.02 to $67.73.
Last week, Richard Bove, an analyst at Ladenburg Thalmann, said Lehman is a candidate for a hostile takeover.
"Management is unwilling to sell out at a deeply distressed value," Bove said in a research note to clients. "The stage is set for a hostile bid to take over the whole company."
If, as many have suggested, Lehman's asset management unit Neuberger Berman is worth $8 billion to $13 billion, then investors value Lehman at nearly zero despite its market value of $10 billion. This makes Lehman a good buying opportunity, Bove said.
Is there another Bear Stearns out there?
Minyanville's Buzz and Banter- 14 day FREE Trial
Bove raised his rating on Lehman's shares to "buy" from "neutral."
But the Wall Street Journal's Heidi Moore says hostile takeovers generally don't work in investment banking. Moreover, she says a hostile bid is unlikely when employees own a 30% stake or more in the company as they do in Lehman.
Portfolio.com said possible buyers for Lehman might include:
Overseas banks: Barclays (BCS) would be a good fit. However, Bob Diamond, president of the investment banking unit, said the British bank might be interested in snapping up a wealth management company, but not an investment bank.
UBS (UBS) has its own woes, and HSBC (HBC) and Deutsche Bank (DB) don't need a Wall Street acquisition. Major Japanese banks have been burned by their prior forays on Wall Street, and are thus more likely to consider commercial and regional banks.
Blackstone Group (BX): Honcho Steve Schwartzman is a former Lehman employee, sparking takeover speculation.
Lehman's Investment management unit would boost Blackstone efforts in the sector and help it diversify beyond buyout funds. Buying Lehman would instantly make Blackstone a major Wall Street firm.
But Schwartzman's decision to take Blackstone public and his interest in philanthropy suggest he's starting the next stage in his career; he may have no desire to take on Lehman and the volatility that comes with a large trading operation.
Lehman may languish, but you can bet the saga continues.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter