Bain Capital LLC and Hellman & Friedman LLC's
deal to buy Lehman Brother Holdings Inc.'s asset management arm for $2.15 billion has become only the starting point for the bankrupt investment bank's division. The sale of the unit, which includes Lehman's crown jewel Neuberger Berman LLC, is being contested by the Carlyle Group, which is gearing up to make a bid of its own, with a number of other firms taking a look as well.
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Other buyout shops reportedly looking at the Lehman assets are TPG
Capital, the Blackstone Group LP and Silver Lake. Even if Bain
and Hellman & Friedman should eventually lose out to another buyer
in the bankruptcy auction set for December, the two firms would receive
a $52.5 million breakup fee if they don't win the auction.
Lehman's creditors were initially unhappy about certain parts of the
$2.15 billion stalking-horse bid, which they felt were designed to chill
competitive bidding. Lehman attorneys from Weil, Gotshal & Manges LLP resolved most of
these objections during an hour-long recess on Oct. 17, that
resulted in substantial changes to the auction guidelines.
The Deal's John Blakeley writes:
The original $70 million breakup fee due to the Bain-Hellman joint
venture, should a rival bidder best them at the auction, has been
lowered to $52.5 million, while a $35 million expense reimbursement
covenant was modified to include only actual expenses the bidders
incurred. In addition, initial overbids were reduced to $25 million
from $50 million, and bid increments at the auction were lowered to $5
million from $25 million.
The auction, initially intended to take place 60 days after bidding
procedure approval, will now take place 45 days later, tentatively Dec.
1. A bankruptcy hearing to approve the sale will be held 15 to 20 days
after the auction, according to the modified procedures.
The assets being auctioned include money manager Neuberger Berman, as
well as the fixed-income, private equity and other alternative-asset
businesses. -
George White
See Dealscape post on stalking-horse bid
