MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
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Friday, July 25, 2008 Battling Analysts Weigh in on Possible Neuberger Sale There is more talk that Lehman Brothers CEO Richard Fuld is facing a difficult decision on whether to sell part of the brokerage firm's stake in Neuberger Berman. A sale of the mutual fund firm would likely please senior Neuberger executives who would reportedly like to be unchained from Lehman as the firm that has been crunched by the credit market's freeze. Neuberger could be worth as much as $8 billion if the entire unit is sold, according to a report on CNBC. However, CNBC on-air editor Charles Gasparino added that ratings firms consider Neuberger a "core asset" and a source of profitability and that they "could come down" on Lehman if it sells the money manager. Gasparino said sources told CNBC that Fuld has considered a sale of a partial stake in the firm. He did not identify the sources. Lehman bought Neuberger Berman in a sale valued at $2.63 billion that was announced five years ago in July 2003. The CNBC report has sparked coverage of the possible sale of the fund arm in Reuters. Interestingly, only a day before the CNBC report hit the air, Reuters had reported that Lehman was unlikely to sell its stake in Neuberger. That earlier Reuters report was based on a note from Morgan Stanley analyst Patrick Pinschmidt. He told the news service that a sale of Neuberger was neither likely nor practical. "While we do not expect asset sales or write-downs to be as large as the second quarter, we do see Lehman continuing to reduce commercial real estate exposure with an eye toward bringing total illiquid assets down another $20 billion by year-end," Pinschmidt wrote. Meanwhile, The New York Post has also picked up the story. The tabloid relies on a research note from UBS bank analyst Glen Schorr to clients that circulated yesterday and was written on Wednesday, prior to the note from the Morgan Stanley analyst. Schorr also wrote that Lehman will pursue the sale of other assets -- including mortgage assets -- with the goal of bolstering its balance sheet. "We feel the most likely scenario is the sale of a large block of risky assets, possibly in concert with the sale of Neuberger, as a way to partially plug any hit to book value realized on the asset sale to possibly avoid another capital raise," Schorr wrote, according to the Post. Finally, the Wall Street Journal blogger Heidi Moore also weighs in on the issue. The paper's Deal Journal blogger comes down against a sale, pointing out that at a valuation of $8 billion Lehman -- which has a market cap of just $13 billion -- can't afford to divest it. Printed from: MFWire.com/story.asp?s=12585 Copyright 2008, InvestmentWires, Inc. All Rights Reserved |