Confusion over Lehman’s M&A deals

Companies being advised by Lehman’s M&A bankers were on Monday struggling to understand the impact of the bank’s bankruptcy on pending deals. Given Lehman’s significant M&A profile, the situation is testing for both the clients and the bankers advising. Lehman’s corporate finance division, which includes M&A, is still technically trading, but bankers said they were told to step away from any live mandates for the time being. These include advising Teva Pharmaceutical Industries on its $7.46bn merger with Barr Pharmaceuticals; advising Verizon Wireless on its $28.1bn takeover of Alltel and advising Continental on its defence from a €12.1bn ($17.2bn, £9.6bn) bid by Schaeffler. If Lehman is among banks advising on a deal, the client is likely to ask other advisers to step into the breach. But it becomes more complicated where Lehman has committed to financing M&A deals, such as the $1.4bn bridge loan the bank is arranging, along with Deutsche Bank, to fund CVS Caremark’s putative take-over of Longs Drugs. Lehman ranks ninth in the global M&A advisory league tables, having advised on 129 deals with a total value of $358.9bn this year, according to Dealogic.