x Abu Dhabi, UAEThursday 27 July 2017

Judge approves Lehman sale

A marathon court sitting ends with Lehman Brothers assets being sold to Barclays but the price is still in flux.

William Brazer, right, of Lehman Brothers MarketMakers, and Anthony Campagna of Speer, Leeds, Kellogg work on the floor of the New York Stock Exchange on Sept 19 2008. Wall Street extended a huge rally as investors stormed back into the market, relieved that the government plans to rescue banks from billions of dollars in bad debt.
William Brazer, right, of Lehman Brothers MarketMakers, and Anthony Campagna of Speer, Leeds, Kellogg work on the floor of the New York Stock Exchange on Sept 19 2008. Wall Street extended a huge rally as investors stormed back into the market, relieved that the government plans to rescue banks from billions of dollars in bad debt.

NEW YORK // A bankruptcy judge has approved a plan today under which Lehman Brothers will sell its investment banking and trading businesses to the British bank Barclays. The deal was said to be worth US$1.75 billion (more than Dh6.4bn) earlier in the week but the value was in flux after lawyers announced changes to the terms on Friday prior to the start of the hearing. It may now be worth closer to $1.35bn, which includes the $960 million price tag on Lehman's Midtown Manhattan office tower.

Lehman filed the biggest bankruptcy in US history on Monday, after Barclays declined to buy the investment bank in its entirety. Barclays bank will take control of Lehman units that employ about 9,000 employees in the US. "Not only is the sale a good match economically, but it will save the jobs of thousands of employees," Lehman lawyer Harvey Miller of Weil, Gotshal & Manges said. Barclays took on a potential liability of $2.5bn to be paid as severance, in case it decides not to keep certain Lehman employees beyond the guaranteed 90 days. But observers have said Barclays' main reason for acquiring Lehman is to get its people and presence in North America, making widespread layoffs less likely.

"It's unimaginable to me that they can run the business without people," said Lehman's financial adviser, Barry Ridings, of Lazard Ltd. Barclays had little competition to land the deal. Mr Miller said that before it filed for bankruptcy, Lehman had negotiated with just one other bidder, Bank of America Corp. BofA instead announced on Monday it would buy Merrill Lynch & Co, saving it from a fate similar to Lehman's. That deal was originally valued at $50bn.

Mr Miller said that since Lehman filed for bankruptcy, Barclays had been the only buyer to express interest in acquiring even parts of the 158-year-old investment bank. Under the new deal, Barclays will buy $47.4bn in securities and assume $45.5bn in liabilities. Barclays also said it would buy three additional units - Lehman Brothers Canada Inc, Argentina-based Lehman Brothers Sudamerica SA and Lehman Brothers Uruguay SA.

AP