Lehman Brothers: So Popular Nobody Wants It

by StockJockey

Wednesday, September 03, 2008 - 6:46 pm

My apologies to Yogi Berra, the title is this post is clearly the work of a rank amateur.

But the soap opera with Lehman Brothers (LEH-NYSE), which the Financial Times accurately described earlier today as "dodgy" has taken a few twists and turns, and every Gossip Girl on the Street is dishing the news:

Japan’s biggest megabank, Tokyo Mitsubishi UFJ is poised to enter the bidding for a substantial stake in Lehman Brothers, and may even seek control of the ailing Wall Street titan, according to banking industry sources in Tokyo.

Senior sources close to the Japanese group say that the possible acquisition is being treated as a “once in a lifetime” opportunity but that the notoriously conservative bank will proceed with extreme caution. Times of London

Of course, nothing really matters until Meredith Whitney opens her mouth. But Dick Bove pre-empted her today, and managed to fit in another media appearance in between media appearances:

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Herbert Lehman (1878-1963)

“I don’t know Dick or Yogi but Jesse Livermore used to spread rumors about us”
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Dick made his way over to Fox Business Network and reiterated a version of his company line, which he has been running with for at least two weeks now:

On Tokyo Mitsubishi reportedly making a bid for a substantial stake in Lehman Brothers:

“I think it’s logical in the sense that Dick Fuld, the CEO of Lehman Brothers, has had plenty of time now to effect a transaction, to do something that would bring capital into the company or take the necessary write-offs. And he hasn’t done it. As a result of his not doing it, we had speculated about 10, 12 days ago that some hostile bidder would come in. Among hostile bidders, we mentioned Japanese banks, companies like HSBC, Canadian banks, we also think there are hedge funds and private equity funds that will come in. The game is over. He lost control of the company. There will be, so to speak, a public auction I think for Lehman Brothers.”

On HSBC eyeing Lehman Brothers as well:

“I think there will be a bidding war. I think however the best buyer is HSBC, simply because HSBC for the last five or six years has been promising it would build a very strong investment banking franchise and it has failed. About a year ago it admitted that it had had total failure in that attempt. So, since it really wants to build a world class investment banking operation, if it were to buy Lehman, since roughly 50% of Lehman’s revenues come from overseas, it would be well on the way to achieving that.”

In afterhours trading Lehman was trading up about a dime from its $16.94 4PM close.

From the Times article it sounds as if the deep pocketed investors are waiting on the sidelines convinced Lehman’s stock will blow up when they release earnings. The script might be a little to cute, but god bless ‘em and their money.

The question might be, from what level does the bidding war start? And how will the regulators look at it....it might not get approved, given Lehman is such a crown jewel of American capitalism, and such.

Of course, maybe Mitsubishi UFJ was never in the mix...they are already denying any interest.
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Tokyo Mitsubishi ‘interested in buying’ Lehman Brothers
Times Online
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No position

Comments:

Seems stupid to think private equity would want to buy. I can see private equity taking a stake in the Bros. for doing the financing on the deal. Market cap about 11 bil. People will still want to finance it, right. How much did BofA pay for countrywide? Did they go outside for financing?

Posted by on 09/03/2008 at 07:57 PM