Is It Over? Bank of America Reportedly Walks From Lehman Deal, Talks With Merrill About Merger
Posted by John Carney, Sep 14, 2008, 4:05pm
Breaking: Bloomberg is reporting that Bank of America is walking away from the deal for Lehman! The WSJ say BofA is in possible merger talks with Merrill Lynch!
Feelings of frustration turned to futility this afternoon, as many working on the frantic negotiations over the fate of Lehman Brothers acknowledged that an acquisition or division of the firm was looking less and less likely and the firm would probably be liquidated in a bankruptcy.
Late last night many believed a deal had been reached with a consortium of international financial firms contributing capital to fund a new "bad bank" entity that would take most of Lehman's toxic real estate assets while Barclays, Nomura and Bank of America acquired a "good bank" of Lehman's healthier business. That deal fell apart today, although the exact reasons remain unclear. Some say Dick Fuld played a role by initially resisting the deal on the grounds that it disadvantaged Lehman's shareholders, others say Barclays toppled it by holding out for a government backstop of Lehman's obligations.
At Lehman Brothers tensions became so intense that a fist fight broke out between two employees, according to a witness.
"It's over," one person familiar with the matter told DealBreaker.
CNBC's Charlie Gasparino reported earlier this afternoon that firms involved were preparing for an orderly bankruptcy, with Bank of America taking a role to back up Lehman's swap trades.
Of course, it's still possible that a deal for Lehman could be worked out. Many believe that the situation has now moved beyond Lehman, with the primary concern being on containing contagion from the collapse of Lehman. This may explain how Merrill and Bank of America have found themselves in merger talks.
Posted by John Carney, Sep 14, 2008, 4:05pm
Breaking: Bloomberg is reporting that Bank of America is walking away from the deal for Lehman! The WSJ say BofA is in possible merger talks with Merrill Lynch!
Feelings of frustration turned to futility this afternoon, as many working on the frantic negotiations over the fate of Lehman Brothers acknowledged that an acquisition or division of the firm was looking less and less likely and the firm would probably be liquidated in a bankruptcy.
Late last night many believed a deal had been reached with a consortium of international financial firms contributing capital to fund a new "bad bank" entity that would take most of Lehman's toxic real estate assets while Barclays, Nomura and Bank of America acquired a "good bank" of Lehman's healthier business. That deal fell apart today, although the exact reasons remain unclear. Some say Dick Fuld played a role by initially resisting the deal on the grounds that it disadvantaged Lehman's shareholders, others say Barclays toppled it by holding out for a government backstop of Lehman's obligations.
At Lehman Brothers tensions became so intense that a fist fight broke out between two employees, according to a witness.
"It's over," one person familiar with the matter told DealBreaker.
CNBC's Charlie Gasparino reported earlier this afternoon that firms involved were preparing for an orderly bankruptcy, with Bank of America taking a role to back up Lehman's swap trades.
Of course, it's still possible that a deal for Lehman could be worked out. Many believe that the situation has now moved beyond Lehman, with the primary concern being on containing contagion from the collapse of Lehman. This may explain how Merrill and Bank of America have found themselves in merger talks.
