Lehman Jumps on News of Korean Interest

Lehman Brothers(LEH Quote) shares surged early Friday after a report that the Korea Development Bank would consider acquiring the struggling U.S. investment bank.

Earlier this week, the New York Post had reported that talks between the two banks had died, as analysts predicted up to $4 billion in third-quarter losses.

"We are studying a number of options and are open to all possibilities, which could include [buying] Lehman,'' a Korea Development Bank spokesman said, according to a Reuters report.

Shares spiked more than 15% to $15.78 on the news.

Because it is heavily exposed to the residential mortgage market and the smallest of the major U.S. investment banks still standing following the collapse of Bear Stearns earlier this year, Lehman's shares have been hit hardest in the credit crisis. The company also took a bruising in a very public battle with hedge fund manager David Einhorn of Greenlight Capital, who took issue with its accounting.

Following the resignation of its COO and CFO in June, Lehman has been shopping itself to Asian investors at the same time it has been talking with potential buyers of its $40 billion in real estate assets and its highly regarded investment management businesses. At the close of trading Tuesday, Lehman's shares were down roughly 80% from their 52-week high.

Lehman also has been shopping its asset-management business, including Neuberger Berman, to private-equity firms.