Fire Sales and Shotgun Weddings
The specter of Bear Stearns has never loomed so large outside the offices of Lehman Brothers. The embattled investment bank made a tough call deciding to auction a crown jewel in a market convinced the bank is close to a going-out-of-business sale. With its stock price crashing, its credit rating shaken and murmurs up and down Wall Street about its counterparty risk, analysts are increasingly convinced that the Fed’s liquidity window – opened to investment banks after Bear’s collapse – will not be enough to save the house.
Chief Executive Dick Fuld implied on Wednesday that he was open to selling the firm, but who would buy now if they could buy later at a cheaper price? And if Lehman is the bride in a shotgun wedding officiated by the Fed’s Ben Bernanke, who would be the groom? Goldman Sachs’ share price fell 2 percent in early trading, and Morgan Stanley is just across the street… a couple doors down 7th avenue from a strip club, in case anyone wanted to throw a batchelor party.
Other deals of the day:
* Japanese dairy goods maker Meiji Dairies will take over chocolate producer Meiji Seika in a stock deal worth about $1.8 billion, creating the country’s fifth-biggest food company.
* CCMP Capital has joined a group led by Japan’s Unison Capital that aims to buy out Daito Trust Construction, filling gaps left by other funds which have reduced their involvement, financial sources said.
* South African IT company Datatec said it has bought a 50.01 percent stake in Inflow Technologies Private, an Indian ICT distribution business, for an undisclosed amount.