(19 September 2008 – Global) British bank Barclays has agreed to purchase parts of Lehman Brothers, the US investment bank that has filed for Bankruptcy.While Barclays was in talks to acquire the US firm before it filed for bankruptcy protection, lack of support from the US Government caused the British bank to walk away.
Now that Barclays can acquire just the pieces of Lehman Brothers that are good quality, it has pounced, buying much of Lehman Brothers for US$1.75 billion (A$2.2 billion).
It is paying up to US$250 million for Lehman’s North American investment banking and capital markets operations and an additional US$1.5 billion for operational infrastructures.
The acquisition is for roughly half the company and includes Lehman’s headquarters building, built in 2001 and currently valued at $US600-$US900 million, according to real estate brokers.
By comparison, the company’s entire stock market value early last year was $US45 billion.
Barclays is buying a stripped-clean version of Lehman’s North American business, which will include most of its people, franchise, brand name, technology and clients.
This, however, does not include the risky trades and liabilities that had hurt Lehman in the markets before it filed for bankruptcy.
The new plan enables Barclays to buy much of Lehman’s securities business without taking the risk of further losses on the firm’s commercial real estate and mortgage assets.
Barclays is set to benefit in two main areas, global stock underwriting and mergers and acquisitions.
Lehman ranked seventh in global stock underwriting this year, while Barclays came in at 19th, according to Dealogic, which tracks securities transactions. In mergers, Lehman ranked fifth and Barclays was 41st.