Alternative Buyers for Lehman (and Not Just the Usual Suspects) 13 comments
Scott Rothbort
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Here is what I am hearing from my broker sources:
Bank of America (BAC) will pay between $2 and $3 for Lehman (LEH) this weekend if and only if Neuberger Berman is kept in the deal.
John Thain of Merrill Lynch (MER) told a group of his brokers that all the toxic stuff was out the door and he can live with what they currently own.
HSBC (HBC) has not been in the hunt for LEH. They have always coveted MER. LEH now seems to look toward Europe (having told South Korea no thanks) while MER likes to go east to places like Singapore. Hong Kong on a relative basis is not far away
If you want to have fun, here are some companies that could buy LEH for cash: AAPL (AAPL) with $20 billion of cash and no debt and produces over $1 billion per quarter; Google (GOOG) with $13 billion of cash and no debt and generates about $500 - $750 million per quarter; and last but not least, Exxon Mobil (XOM) which has nearly $40 billion of cash versus debt of just over $7 billion.
Heck, XOM can create an SPV of $20 billion and buy LEH and just be patient and wait. Worse come to worse, XOM does the little guy a favor who can’t afford his home because of rising energy prices. Boy, what a political windfall that would be! Instead of putting a tax on the energy companies, which is not popular with about half the electorate, have the energy firms buy LEH and thus save the taxpayer from owning more mortgages and real estate as a result of backing up LEH through Treasury and Fed (hence taxpayer) support. In essence the windfall profit on the energies is averted by passing the mortgage debt right to those companies and bypassing the taxpayer. Then again, is there anyone in the government who would have this type of creativity? Doubtful. However to our law makers and regulators, I am always available for consultation. I even have a toll free number.
Disclosure: At the time of this blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC were long shares and/or options of AAPL, GOOG and MER --- although positions can change at any time.
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This article has 13 comments:
Maybe your next post could be on how FRE and FNM are going to rebound back to 10.00?
Got a better idea that won't cost the taxpayer a bundle?
Lehman Gets Bids From Bain, Clayton for Asset-Management Unit
By Jason Kelly and Jonathan Keehner
Sept. 13 (Bloomberg) -- Lehman Brothers Holdings Inc. received bids for its asset-management unit from private- equity firms including Bain Capital LLC and Clayton Dubilier & Rice Inc., said people familiar with the situation.
The bids value the unit, which includes the Neuberger Berman fund business, private-equity funds and a brokerage firm serving wealthy individuals, at about $5 billion, said the people, who asked not to be named because the auction is private. KKR & Co. LP, which was weighing an offer, hadn't made a bid by the 5 p.m. deadline, the buyout firm told people involved in the process.
Lehman said Sept. 10 it would sell 55 percent of the investment unit, part of Chief Executive Officer Richard Fuld's plan to keep the 158-year-old firm independent. After its shares dropped 53 percent in the next two days, Fuld, 62, began talks with companies including Bank of America Corp. to sell all of Lehman, potentially derailing the investment-management auction.
``It's still going to be a premier property,'' said Eric Weber, a managing director of Freeman & Co., a New York-based financial-services consulting firm. ``Three years from now, you can take it public, if you can get your hands on it.''
Hellman & Friedman LLC, the San Francisco-based buyout firm started by Warren Hellman, may also have submitted a bid, according to the people. Representatives for Lehman and the private-equity firms declined to comment.
Revenue of $2.3 Billion
The buyout companies are angling to own a business with assets of $273 billion headed by former Goldman Sachs Group Inc. banker George Walker, 39. The New York-based firm proceeded with the auction because the private-equity firms continued to express interest in a deal, according to the people. While Lehman aimed to complete the sale by late next month, the process may be disrupted by a takeover of the company, perhaps as soon as this weekend.
The private-equity firms may get the investment business at a discount. Lehman's asset-management unit earned $361 million on $2.3 billion of revenue this year through August, according to a Sanford Bernstein research note at that time. The report valued the unit at $7 billion, including stakes in hedge-funds not included in the sale.
Lehman announced on Sept. 10 a $3.9 billion loss, the biggest in its history, after $5.6 billion of writedowns on real-estate loans and mortgages. The stock has fallen more than 94 percent this year and is valued below $3 billion, less than St. Petersburg, Florida-based Raymond James Financial Inc., the largest regional brokerage firm.
Private-equity firms including Blackstone Group LP and Carlyle Group had weighed bids for the investment unit and opted to stay out of the auction, according to people familiar with the process.
To contact the reporters on this story: Jason Kelly in New York at jkelly14@bloomberg.net... Jonathan Keehner in New York at jkeehner@bloomberg.net
Last Updated: September 13, 2008 00:01 EDT
Capitch...LOL
Deep pockets, long term growth/profits. Who fits this mold?????
SOCIAL SECURITY TRUST FUND!!!!!!!!!
Buy these American assets, keep ownership american, keep future profits/growth here. Jobs here. The trust fund is solvent short term
20 years, over the long term future these investment will pay off handsomely.
Buy Lehman, Merrill, AIG, WAMU and watch the future grow.
Someone actually has a sense of humor!
XOM's R&D will never buffer a buyout though, and to tell you the truth XOM likes geoscientists in management, not MBA's. XOM does a hell of a lot more than buying a few mortgages for our society (that would be like throwing a doallr in the offering plate for them). So all of you who actually take any of this article seriously, try Paxil, you might actually feel better about yourself.
You need new sources!