Lehman Said to Be in Discussions About Potential Sale (Yalman Onaran)

Sept. 11 (Bloomberg) -- Lehman Brothers Holdings Inc. entered into talks with potential buyers of the securities firm after Moody's Investors Service said the company must find a "stronger financial partner" and the shares plummeted. 

The U.S. Treasury and the Federal Reserve have been working with Lehman on a sale, and a deal may be announced before Asian markets open Sept. 15., a person with knowledge of the matter said. The government isn't likely to contribute money, the person said. Bankers from other firms were reviewing Lehman's books today, according to people with knowledge of the situation, who declined to identify potential acquirers.

{xtypo_quote_right} "The likely solution is that someone will bail it out and at this rate it may be for a nominal sum," said Simon Maughan, a London-based analyst at MF Global Securities Ltd. "The market is not going to give Lehman time to get on with its plan." {/xtypo_quote_right} 

Without a "strategic arrangement" in the "near term," Lehman's credit-ratings may be downgraded, Moody's said yesterday after the New York-based investment bank announced the biggest loss in its 158-year history. A downgrade could increase Lehman's borrowing costs and deter others from trading with the bank. Lehman, led by Chief Executive Officer Richard Fuld, fell 42 percent in New York trading today, ceding its spot as the fourth-biggest U.S. securities firm by market value to Raymond James Financial Inc. in St. Petersburg, Florida.

"While the number of potential acquirers at this point is very few, Moody's action certainly raises the specter of takeout, potentially at a very low price," said Merrill Lynch & Co. analyst Guy Moszkowski in a report today. He lowered his recommendation on the stock to "no opinion," saying a potential "take-under" makes it hard to gauge a price target.

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