Lehman Brothers Scrambling for Buyer
Updated from 12:03 p.m. EDT
Lehman Brothers
(LEH)
continued to sink Friday, as reports say the besieged bank investment bank was seeking a buyer with federal help.
Treasury Secretary Henry Paulson was "adamant" that no government money would be part of any deal to resolve the situation, the
Associated Press
reported, citing a source familiar with Paulson's thinking. The
Federal Reserve
backstopped $29 billion worth of illiquid mortgage-related securities from
Bear Stearns
when it brokered a deal to
JPMorgan Chase
(JPM) - Get Report
in March.
Like Bear, Lehman's fortunes are strongly connected to the real estate and fixed-income markets, which has been at the center of the current economic crisis. The Fed gave investment banks the ability to borrow directly from the federal government at a discount in March, shortly after the JPMorgan deal.
Lehman shares were recently down 14.9% to $3.59 on the New York Stock Exchange, signaling it was well on its way to a fifth straight day of losses. The stock closed trading at $16.20 on Sept. 5, and the shares are off 90% from their 52-week high.
CEO Richard Fuld began actively shopping the entire firm after the market's sour response to
capital preservation plan unveiled Thursday morning,
CNBC
reported Thursday, citing sources close to the firm.
The Financial Times
is reporting that
Bank of America
(BAC) - Get Report
, private equity firm JC Flowers & Co. and China Investment Co. could be weighing a joint bid.
Barclays
(BCS) - Get Report
and
HSBC
(HBC)
have also been cited elsewhere as possible buyers.
Lehman, after several days of losses, said Wednesday that it would sell a majority stake in its asset-management business, spin off its commercial real-estate assets into a new publicly traded company and cut its annual dividend to 5 cents a share from 68 cents.
Goldman Sachs, Oppenheimer & Co., Banc of America Securities and Citigroup all downgraded the stock Thursday morning, sending shares spiraling downward 41% to $4.25.
"Management did not successfully put to rest the issues that had been pressuring the stock," Goldman analyst William Tanona wrote.
