Top staffers to take a majority stake in Neuberger

FWR Staff

4 December 2008

Management-team bid wins out over (reluctant?) rivals for Lehman businesses. A group of senior executives of Lehman Brothers' Neuberger Berman has topped a $2.15-billion bid from private-equity firms Bain Capital Partners and Hellman & Friedman to acquire a majority stake in Neuberger Berman and the fixed-income and alternative asset-management businesses of Lehman Brothers' Investment Management division.

Lehman filed for bankruptcy protection in September 2008.

The unspecified bid from a collection of Neuberger Berman's portfolio managers, senior professionals and top-floor brass -- including George Walker, head of asset management for Lehman Brothers and a cousin of U.S. president George Bush -- prevailed in a bankruptcy-court auction yesterday.

The bid is subject to the court's final OK later this month. If all goes according to plan, the deal should close early in 2009.

The management team's offer won out because it provides greater value and more certainty of closing, according to Lehman's COO James Fogarty.

Old guard

"We regard this transaction as the best outcome for the creditors of Lehman Brothers," says Fogarty, who is also a managing director of New York-based corporate turnaround specialists Alvarez & Marsal. " continued success."

The listed value of Lehman's asset-management business has dropped sharply since Bain Capital and Hellman & Friedman made their initial offer on 29. The private-equity firms had a get-out clause if the S&P closed under 902 in the 10 trading days before the deal's close. In fact the broad-market gauge hasn't closed above 900 since early in November.

Another firm touted as a possible bidder for Neuberger, Washington, D.C.-based private-equity giant Carlyle, dropped out of contention before the 1 December deadline for bids.

London-based Barclays agreed to buy Lehman's investment-banking, brokerage and research operations along with some real estate in Manhattan and nearby New Jersey within a few days of Lehman's bankruptcy filing. -FWR

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