Fuld Festers While Takeunder Talk Transpires

What is Lehman (LEH-NYSE) worth in a takeout?

That is a good question, but you are not going to find the answer at this address. Technicians might be working on the assumption that the stock is range bound between the 52-week low of $20.25 and the $28 level where the recent capital raise was priced, at least for the time being. Cracking either side of the range would certainly lead to spirited trading, however.

But regulators seem to be backing away from Lehman at a measured pace. Washington might let someone go down, but want to minimize the fallout to counterparties. Will Dick Fuld drown despite his $45 billion liquidity pool? Many people are beginning to claim he should go, but I have never given the idea much credence, and Dick seems to be dug in deeper than Jimmy Cayne ever was.

And while Fuld's future is up in the air, or not, the dirty vile gossip that Jim Chanos so abhors continues unabated. Is Lehman, at best, a takeunder from the current $24 quote?

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Herbie’s still smiling, but Dick Fuld probably is not

Herbert Lehman (1878-1963)
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....why would any potential Lehman bidder pony up more than what the stock is currently trading at, which is about $25 a share?

To be sure, Lehman doesn’t seem to be in as dire straits as Bear Stearns was just before it was forced to sell out to JPMorgan Chase (JPM, Fortune 500) at a fire sale price. But make no mistake, if Lehman were to try and sell itself now, it very likely would be a “takeunder” and not a takeover.

“Lehman Brothers is not the same type of distressed situation as Bear Stearns. But at the same time, I’m not sure they could command much of a premium,” Barkocy said.

“It’s a difficult merger market for banks right now,” said one banking merger expert who asked not to be named. “The only reason Bear Stearns got done was because of government assistance.” CNN Money

While those thoughts are not exactly groundbreaking, one of the quotes cannot be disputed:

“I’m not sure any prospective buyers know their own balance sheets well enough let alone Lehman’s balance sheet,” the source said.

Hank Paulson is wrapping up his press conference as we speak, and market participants will have to draw their own conclusions, perhaps by reading the regulators body language, and between the lines.

The past year on Wall Street reminds me more of Animal House than any Greek tragedy, and I would have agree with Bluto, whose fact checking likely raised the ire of Jim Chanos when he was a younger man.

It wasn’t over when the Germans bombed Pearl Harbor, and it ain’t over for Lehman, just yet.

Although it is one hell of a food fight.
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Even Bluto had trouble rallying the troops

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Ignore the Lehman takeover chatter
CNN Money
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