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September 11, 2008

Lehman Keeps Bleeding

Matthew Goldstein

The Lehman Brothers bloodbath continues, as shares of the beleaguered investment bank tumbled again today—just one day after the firm announced a still evolving plan to put its financial affairs in order. In late morning trading, shares of Lehman were off 40% to about $4.40. The stock has plummeted more than 70% this week.

The vicious sell-off is Wall Street’s way of saying it doubts Lehman CEO Dick Fuld can get the job done. Traders worry Fuld won’t be able to raise the necessary capital from the sale of a majority stake in its Neuberger Berman asset management business, to fund a new Lehman spin-off that will house some $30 billion in ailing commercial real estate assets. It’s increasingly looking like the firm’s days as an independent firm are numbered, as one analyst after another begins saying Lehman needs to find another bank to rescue it from oblivion.

And there’s a lot of fear on Wall Street that the federal government may be reluctant to step-in and actively engineer a deal for Lehman, the way the Federal Reserve did for Bear Stearns in March. That’s especially so if the only potential buyer is a foreign bank such as, Barclays, HSBC or Royal Bank of Scotland—all of which have often been mentioned as possible acquirers.

The list of possible domestic partners for Lehman is pretty slim. JPMorganChase still has its hands full digesting Bear. The same can be said for Bank of America, which recently closed on its deal for troubled mortgage lender Countrywide Financial. David Hendler, an analyst with CreditSights is suggesting Goldman Sachs, which has weathered the credit crunch better than any other Wall Street firm, as a possible emergency suitor. But complicating matters is the unfolding situation with Washington Mutual, the nation’s largest thrift now trading at $2 a share. WaMu’s stock has been the other big casualty this week, plunging 53% over the past four days. There’s a possibility that WaMu also may need to be rescued by a bigger bank.

Meanwhile, the mood inside Lehman’s Times Square office is said to be somber. Sources say many of the brokers at Lehman have listed with headhunters, trying to find new jobs. Teams of traders are putting out feelers to friends at other Wall Street firms about making a jump.

11:23 AM

investment banks

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Comments

Folks:

Finally we have the bottom of this controlled market crash.

I suggest you read the analysis note below as it relates prices of previous bear bottom to today's price.

" Bottom analysis from

http://marketwarnings.blogspot.com/2008/10/dow-sp500-october-2008-bottom-buying.html

Time to buy! What do you think?


Posted by: mike at October 9, 2008 10:14 PM

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