Update: Dealbreaker update follows original post.
We understand that a deal has been reached to divide Lehman Brothers into two entities, with a "bad bank" taking the toxic, real-estate assets amounting to around $85 billion. The deal will be financed without any government backing. Lehman chief executive Dick Fuld will resign.
Bank of America will take the lion's share of the good assets of Lehman, with Barclay's and Nomura playing a role as well. An international consortium of financial firms will inject capital for the deal, preventing Lehman's assets from flooding the market in a fire sale. Many US based firms have not played a large role, in part because they are facing their own financial challenges.
Dick Fuld's resignation was demanded by Bank of America, which played a brinkmanship role in negotiations, threating to let Asian markets open tomorrow without a deal in place, a person familiar with the matter says. Many believe that a Monday market opening without a resolution would effectively have been the end of Lehman Brothers and could have spread financial turbulence to other securities firms. (On a side note: apparently, Japanese markets will be closed Monday morning for a holiday.)>>>MORE
The DealBreaker story was "Posted by John Carney, Sep 14, 2008, 2:43am". There are other reports that talks are ongoing.
Posted by John Carney, Sep 14, 2008, 10:37am
Good morning. Here's the latest we have on Lehman Brothers. Top Wall Street executives and Washington officials returned to meetings at the New York Federal Reserve this morning.
Barclays has emerged a the leading contender for a takeover of Lehman, the Wall Street Journal reports. The role of government support for a sale of Lehman remains a sticking point, with both Barclays and Bank of America insisting that the government commit to backing the deal with financing while officials from the Treasury Department remain adamant against that backing.
The Financial Times sees a different group as the leader:At CNBC, Steve Liesman provides some details on what the Fed's officials in Washington and New York have been up to....MORE
Bank of America is seen as the leading candidate to buy Lehman. It is considering a possible joint takeover bid with JC Flowers , the financial investor, and China Investment Corporation, the Chinese sovereign wealth fund. UK bank Barclays is also interested. The three could combine, with the BoA consortium buying Lehman's investment bank and Barclays taking its asset management arm, which includes Neuberger Berman.