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Lehman unloads it banking divisions to Barclays
Wednesday September 17, 1:21 am ET
By Joe Bel Bruno and Stephen Bernard, AP Business Writers
Barclays gets Lehman's North American banking and capital markets units for a Wall Street song


NEW YORK (AP) -- Lehman Brothers, which a year ago had a market capitalization of more than $33 billion, is now unloading its once-prized businesses for what passes as pocket change on Wall Street.
Barclays PLC, the third-largest British bank, took advantage of Lehman Brothers Holdings Inc.'s bankruptcy reorganization Tuesday to reach a deal for Lehman's North American investment banking and trading operations for just $250 million.

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Barclays also picked up Lehman's New York headquarters and two data centers in New Jersey for $1.5 billion.

It marks a major coup for the U.K. bank, which agreed to buy the assets just days after walking away from a deal to purchase all of Lehman.

The U.S. investment bank filed for bankruptcy protection on Monday after it was unable to find financing or fresh capital to shore up its balance sheet amid a continued downturn in the credit markets.

The deals require approval from the bankruptcy court.

Meanwhile, Lehman executives continue to negotiate a potential sale of its prized investment management division, which includes money manager Neuberger Berman. The division was once valued by as much as $10 billion by Wall Street analysts, but now could fetch much less considering Lehman's bankruptcy proceedings.

A person familiar with the negotiations, who spoke on the condition of anonymity because the talks are ongoing, said Lehman was focusing on trying to sell the business to private-equity firms. The sale is expected to happen in a matter of days, the person said.

Bain Capital and Hellman & Friedman are the two top private-equity shops bidding on the investment management division, the person said, but Kohlberg Kravis Roberts & Co. is still in the running.

Barclays said it will acquire Lehman's North American banking operations, which include fixed income and equities sales, trading and research and investment banking business. The deal throws a lifeline to about 10,000 employees working in the divisions.

Barclays and Lehman reached the agreement hours after Lehman's first bankruptcy hearing in a crowded courtroom at the U.S. bankruptcy court in Manhattan, just steps away from Wall Street's iconic bull statue.

JPMorgan advanced Lehman $87 billion when the market opened Monday, acting in part on a request by the Federal Reserve Bank of New York. The New York Fed later repaid JPMorgan that amount. On Tuesday, JPMorgan advanced another $51 billion.

Shai Waisman, a lawyer for Weil, Gotshal & Manges, LLP representing Lehman Brothers, in his opening statement argued that Lehman's Brothers' downfall was the result of a "chain reaction" of events that were largely out of the investment bank's control.

"Lehman operated in an extremely unfavorable business environment," Waisman said, referring to declining asset values and low levels of liquidity.

Judge James Peck approved a motion that JPMorgan Chase & Co. will remain Lehman's clearing house through the bankruptcy proceedings. The issue arose over the past two days, when JPMorgan made the advances to Lehman to allow it to keep trading and "avoid a disruption of the financial markets," according to court filings.

Also on Tuesday, the House Oversight and Government Reform committee said it would hold a hearing Sept. 25 to examine the "regulatory mistakes and financial excesses" that led to Lehman's bankruptcy filing. It asked Lehman Chief Executive Richard Fuld to testify before the committee.

AP Business Writers Vinnee Tong and Madlen Read contributed to this story.

Some some more info. on LEH and the GLBA ...here's a
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Good Luck to everyone next week!

Wings.....

"If we did all the things we are capable of doing,
we would literally astound ourselves." -- Thomas Edison

Wings Thanks for the link There are many people watching this one.

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Lehman Said to Weigh Sale of Merchant-Banking Fund to Managers

Jan. 8 (Bloomberg) -- Lehman Brothers Holdings Inc., the bankrupt U.S. securities firm, is poised to sell one of its largest merchant-banking funds to the managers overseeing the unit, two people with knowledge of the talks said.

Lehman’s bankruptcy estate would retain stakes in the fund’s previous investments after the buyout by managers in the U.S. and Europe, according to the people, who asked not to be identified because the talks are confidential. They declined to specify the sale price, saying the deal hasn’t been completed.

The merchant-banking business was housed in Lehman’s private-equity division, along with venture capital and real estate funds that are being sold in separate auctions. Led by Charles Ayres in New York, the merchant-banking group invested in funds that bought stakes in Angelica Corp., the Chesterfield, Missouri-based hospital linens provider, and SRAM Corp., the Chicago-based maker of bicycle components.

The management buyout may draw on financial backing from one of the firms that submitted bids for the merchant-banking group last month, the people with knowledge of the talks said. The bidders included New York-based buyout firms Blackstone Group LP and Lexington Partners Inc., and Barclays PLC, the U.K.’s third largest bank, as well as Pamplona Capital Management, a London- based private-equity firm.

Alvarez & Marsal, the restructuring company managing Lehman’s liquidation, hired Lazard Ltd. in New York to conduct the sale. Rebecca Baker, Alvarez & Marsal’s chief marketing officer, and Ayres didn’t return phone calls seeking comment. Lazard spokeswoman Monica Orbe declined to comment.

Limited Partners

As part of the deal, limited partners that invested in the fund would be allowed to reduce future contributions amid a drought for takeovers, one of the people said. The limited partners include the Colorado Public Employees’ Retirement Association, Pennsylvania Public School Employees’ Retirement System, Illinois Teachers’ Retirement System and New York City Employees’ Retirement System.

Law firm Kirkland & Ellis LLP and private-equity adviser StepStone Group LLC are counseling the limited partners. Kirkland spokeswoman Kate Kortenkamp declined to comment, as did StepStone spokesman Owen Blicksilver.

Lehman agreed to sell its Neuberger Berman investment- management business to its managers last month in an all-stock deal that left the bankruptcy estate with a 49 percent stake.

Lehman filed for the largest bankruptcy in U.S. history on Sept. 15, when it listed assets of $639 billion and liabilities of $613 billion. Sales of assets, including Lehman’s brokerage operations, have so far brought in about $3.5 billion in cash, Lehman’s lead bankruptcy attorney, Harvey Miller of law firm Weil, Gotshal & Manges, said Nov. 20.

To contact the reporter on this story: Serena Saitto in New York at ssaitto@bloomberg.net.

Last Updated: January 8, 2009 17:34 EST

Possible secondary bounce off .038 .043 here on Lehman Brothers Holdings Inc. LEHMQ

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All my posts are purely my opinion. Please use your own buy and sell signals and never invest in a stock you can not afford to lose money on. For a complete disclaimer click here