DealZone

Who’s next and how?

September 15, 2008

A worker carries a box out of the U.S. investment bank Lehman Brothers in LondonLehman‘s most valuable assets, primarily Neuberger Berman, are still on the block, but becoming less valuable by the hour with the bank having filed for bankruptcy protection. And with Merrill Lynch now heading for the relative safety of Bank of America‘s $50 billion embrace, it’s time ask “Who is next and how?” Most attention is squarely focused on insurer AIG and investment bank Morgan Stanley.

AIG’s shares lost a third of their value in pre-market Monday action. Warren Buffett would be a natural candidate for AIG assets, given it’s a business he knows (and part of being a successful oracle is knowing your businesses).

On Sunday AIG is reported by the New York Times to have approached the Fed seeking $40 billion in short-term financing. An investor call is expected later today.
The Fed might be more willing to play a role in getting AIG sorted out as well, if it sensed a systemic risk to another strut of the financial markets.

AIG execs reportedly met top New York state officials including Governor David Paterson and insurance and banking regulators over the weekend, seeking permission to liquidate assets, such as Manhattan real estate, to raise cash.   

Morgan Stanley could be a much tougher sell, if it comes to that. The market for investment banks is not too healthy, to say the least.

Other deals of the day:

* Longs Drug Stores said it will weigh a $75 per share takeover bid by Walgreen, but the drug store chain said for now it still recommends that shareholders accept an earlier tender offer by rival CVS Caremark.

* Chinese state-owned trading firm Sinosteel‘s stake in Australian iron ore prospector Midwest Corp has risen to more than 82 percent after a former senior Midwest executive sold a stake, Sinosteel said on Monday.

* Israeli food maker Osem Investments and Swiss parent Nestle signed a deal to buy 51 percent of a unit of Maabarot Products for 248.7 million shekels ($69 million), Osem said.

* Google has bought Korean blogging software developer Tatter and Company, the two companies said.

* Borealis Infrastructure Management, an investment arm of the Ontario Municipal Employees Retirement System, said it has formally commenced its takeover bid for Teranet Income Fund for C$11 per unit.

* The chief executive of Northwest Airlines said he still expects the carrier’s merger with Delta Air Lines to close in the fourth quarter.

You can place a bet on the next victim of the credit crisis by clicking on the graph below, which links to the news prediction website www.hubdub.com.

Comments
4 comments so far | RSS Comments RSS

Perhaps a few will fall to save a few, and it’s hard to believe all of the investment banks could have been that over-loaded with toxic deals and so much bravado when it comes to everyones’ nemesis: risk.

 

Unfortunatly this is going to be nightmare for the companies where this two major Finance Companies has has spreaded their investment , The real impact of this will be seen aftershock when the valuation of the other invested companies will be grounded which is absoulutly just aired by manipulation…I wonder if Ashian Market like India will survive with the aftershock. The movement thier FII investment index goes down then i doubt indian forex reserve will see other good day again. This is really a brilliant economic experience which the entire world finance market is going to have ! i wonder still people are holpefull abour their returns.

Posted by Stephen Dsilva | Report as abusive
 

The aftershock waves will eradicate the conencted investment banks on the same line & might othe banks around the world who have exposures via other mode of investment will have terrible effect on their portfolio

Posted by Stephen Dsilva | Report as abusive
 

Hi..I’m from India. Actually, I read the above comment from Stephen Dsilva about the consequences in the Indian market. I think I should let you know that the most important thing we respect in India is not stock-markets. It is treated only as a luxury and not a part of living of the common man as it is done in the western countries. The main reason being, we have a history that is literally unrivalled and we have withstood great changes – this stock changes is one of the negligible changes. In that sense, being a common man, I know I may not be able to watch TV, have an air-conditioner, ride a luxury car and so on if the stocks go away, but life here goes on blissfully. Effectively, this country has existed before western stock markets were born and would live after they go away – common man isn’t too dependent on these changes and they aren’t taken too seriously by the common man here like they are in the west.

Posted by Ramachandran | Report as abusive
 

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