Just as it looked like the Korean contingent had abandoned Lehman, Reuters cites South Korea’s Yonhap news agency reporting on Wednesday morning that state-run Korea Development Bank is seeking a controlling stake in Lehman Brothers, for about $6bn. Yonhap quoted an unnamed KDB official as saying the two sides were negotiating and the deal’s size was larger than the 25 per cent stake mentioned in previous reports.
The Wednesday report follows Reuters’ report Tuesday that suggested KDB had abandoned the pursuit of Lehman, which helped drive down the US investment bank’s share price by a staggering 45 per cent in New York.
But wait! From Reuters a little later on Wednesday:
KDB not closer to Lehmann deal - S. Korean official
KDB has made an offer to Lehman, waiting for response - KDB official
KDB deal with Lehman look sdifficult in current circumstances - KDB official
As the FT notes today, Tuesday’s plunge brought Lehman’s stock price down $6.36 to $7.79, giving it a market value of $5.4bn, which suggests KDB could easily buy the whole shop - and then some.
Meanwhile, in a saga with more twists than a Korean TV soap opera, The Wall Street Journal reports on Wednesday that Lehman plans to announce it is in talks with money manager BlackRock to sell a package of primarily British residential real-estate assets.
Also, says the Journal, Lehman is expected to announce a separate plan to spin off some commercial real-estate assets into a new company, referred to internally at Lehman as SpinCo. The remaining portion of the firm, shorn of much of its distressed real-estate assets, is being called CleanCo, these people say.
Bloomberg adds on Wednesday that Lehman is also continuing talks with private-equity firms including KKR and Carlyle Group about selling its asset-management business, which includes fund manager Neuberger Berman.
On top of all this, Japan’s Yomiuri newspaper said Nomura, Japan’s biggest investment bank, may now bid for a stake in Lehman.
On Tuesday both S&P and Fitch signaled possible ratings downgrades on Lehman, citing uncertainty over the firm’s ability to raise capital. A downgrade would probably require Lehman to post large amounts of fresh collateral with its trading counterparties.
But right now, it would seem, Lehman has more problems than that to worry about.
