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Friday, August 22, 2008

Korean Bank Eyes Lehman Brothers

Lehman Brothers (LEH) surged 13% in premarket trading after Reuters reported Korea Development Bank may buy the struggling U.S. brokerage firm. “We are studying a number of options and are open to all possibilities, which could include (buying) Lehman,” a KDB spokesman said, Reuters reported. The comments come just a day after another sovereign wealth fund, Singapore’s Temasek, expressed interest in possibly adding to its stake in another hard-hit U.S. financial firm, Merrill Lynch (MER).

Lehman has been seeking a buyer for part of its investment management business in its latest bid to raise new capital, but talks with possible partners in Korea and China reportedly broke down earlier this week over price. That led analyst Dick Bove to write in a research note Thursday that the firm could be headed for a hostile buyout. Whether Lehman chief Dick Fuld, who has said he wants the firm to remain independent, would be open to a deal with the state-owned Korean bank remains to be seen. But with Lehman in need of cash as mortgage-related assets suffer a continuing decline, he will certainly have to have an open mind.