Lehman in talks to sell off Japan equity, assets

Bloomberg

Lehman Brothers Holdings Inc. is in talks to sell some Japan assets to Sumitomo Mitsui Financial Group Inc. in an effort to save its 1,300-employee operation, three people familiar with the matter said.

Lehman Brothers Japan Inc. is also trying to sell assets including its equity, investment banking and real-estate businesses to Mitsubishi UFJ Financial Group Inc. and Barclays PLC, two of the people said, declining to be identified as the discussions aren’t public.

Banks worldwide are picking over Lehman’s assets while headhunters target its employees, after the 158-year-old company filed for bankruptcy Monday. Sumitomo Mitsui and Mitsubishi UFJ have avoided the worst of the credit losses and writedowns that sank Lehman and Bear Stearns Cos. and forced Merrill Lynch & Co. to sell itself to Bank of America Corp.

“Japan banks haven’t been hurt as much by the subprime crisis, and their opportunities to grow revenues at home are declining,’ said Naoki Fujiwara, chief fund manager at Tokyo-based Shinkin Asset Management Co. “This is a good chance to gain investment banking knowhow.”

Sumitomo Mitsui, which invested £500 million ($901 million) in Barclays in July, may also seek to buy businesses from New York-based Lehman elsewhere in Asia, the people said. South Korea’s financial regulator said Tuesday it suspended Lehman’s local units.

Sumitomo Mitsui spokeswoman Chika Togawa denied the bank is in talks to buy Lehman’s local assets. Mitsubishi UFJ spokesman Takashi Takeuchi, Lehman spokeswoman Keiko Sugai and Barclays spokesman Yu Sakakibara declined to comment.

Lehman hired investment bank Rothschild to advise it on the sale of assets in Asia, Reuters reported Friday, citing an unidentified person familiar with the matter.

London-based Barclays agreed this week to buy Lehman’s North American investment-banking unit for $1.75 billion. Private-equity firms Bain Capital LLC and Hellman & Friedman LLC are negotiating as a team to acquire Lehman’s investment-management unit, according to people familiar with the discussions.

Tokyo-based Sumitomo Mitsui, which has a 40 percent stake in Daiwa Securities SMBC Co., is the only one of Japan’s three biggest banks that lacks majority control over an investment-banking unit. The lender has reported about $910 million in losses on subprime-related investments since the start of April 2007, compared with more than $13 billion in such charges at Lehman and $52 billion at Merrill.

Lehman’s main units in Japan filed for bankruptcy this week listing about ¥4.7 trillion of liabilities.

The company ranked 14th last year in underwriting Japanese stock sales and hasn’t worked on any such transactions this year, according to data compiled by Bloomberg. Lehman was the ninth-biggest adviser on mergers and acquisitions in the country, advising on 13 deals, Bloomberg data shows.

Lehman Brothers Japan President Akio Katsuragi this week said the company wants to find a buyer and that Japanese firms are among potential acquirers.

Discussions might fail unless Lehman is able to stem its employee exodus.