Updated from 4:09 a.m. EDT.
Hellman & Friedman
have agreed to acquire a large chunk of
investment-management unit, including its Neuberger Berman division, for $2.15 billion.
The private equity firms will create a new, independent investment management company encompassing the businesses, which managed more than $230 billion of assets as of Aug. 31. Neuberger Berman will be the largest operating unit of the new company and, with the fixed income and alternative asset management units, will form its core.
"We are excited and energized about what this means for our clients and our employees," George Walker, global head of investment management for Lehman Brothers, said in a statement. "I can't think of two better partners than Bain Capital and Hellman & Friedman, with proven track records of creating value in financial services, and asset management in particular. Our portfolio management and client teams are extremely enthusiastic about this next chapter in our history."
Bain and Hellman & Friedman will split the investment evenly. Neuberger and former Lehman portfolio managers and management will also take ownership stakes and them over time through an equity-based compensation program.
The deal is expected to close in early 2009, subject to certain conditions, including bankruptcy court approval.
The transaction, which was set to be announced more than a week ago, has been held up by a number of sticky issues, the
Wall Street Journal
reports, citing people familiar with the transaction. The issues include protracted contract negotiations with Neuberger's money managers.
As recently as August, Lehman's investment-management unit was valued at about $7 billion by Wall Street analysts, the
Lehman's bankruptcy, which came six months after the fire sale of
, came at the beginning of a tumultuous month on Wall Street. The federal government has engineered takeovers of
and regulators seized
and brokered a sale of its deposits and assets to
. Former investment banks
asked to be made into traditional bank holding companies in order to stave off a market attack on their shares.
This article was written by a staff member of TheStreet.com.