Posted by: Ben Steverman on June 30, 2008
By Matthew Goldstein
Shares of the battered investment bank took another beating on Monday on widespread speculation that a rival firm was going to make a bid for Lehman Brothers (LEH) at a substantial discount to its current price. Much of the speculation, traders say, focused around Barclays (BCS), the British-based bank. Lehman shares fell 11% to finish under $20.
The talk on Wall Street is that Barclays may be preparing to make a bid for Lehman at a severe discount from Monday’s closing price. Officials with Barclays had no comment, and a Lehman spokesman says, “no comment per our policy of not commenting on rumor or speculation.” In any transaction, Lehman’s most prized asset may be its Neuberger Berman asset management group, which it acquired five years ago for $2.6 billion.
Last week Barclays announced that it was raising $8.9 billion in capital through a sale of stock to a group of private investors. The bank, like many Wall Street firms, is raising capital to shore-up its balance sheet. But some have speculated that Barclays is raising more capital than it needs, given that it has not had as much in subprime writedowns as other financial firms. This has led to speculation that Barclays might also be raising capital to finance an acquisition.
Lehman shares have been under pressure for months because of poor earnings and soaring write-downs. But for the moment, the talk about Barclays or another big bank stepping in to buy Lehman is nothing more than Wall Street chatter. Lehman CEO Richard Fuld, on a number of occasions, has said the firm has no interest in being acquired.
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