Since June 2008, Lehman Brothers Holding Inc.—a parent company of Lehman Brothers
Inc. or “Lehman”—had raised the capital of $4 billion in common equity and $2 billion in
convertible stock to safeguard itself from any possible hard-hitting waves that could come after
serious precipitation of the most recent global financial crisis.
Nevertheless, the extra amount of
bad debt of approximately $11.4 billion of mortgage and asset-backed securities and $5.3 billion
in US subprime residential mortgage-related assets that piled up in Lehman's balance sheet
caused the firm to file for Chapter 11 bankruptcy protection in New York on September 15,
2008, in order to seek the best possible deal from an interested buyer.
Under Chapter 11,
Lehman was able to operate and make business decisions normally but within the bankruptcy
court’s discretion; thus, Lehman could still seek the best possible buyer.
Even though a
negotiation between Barclays and Lehman did not succeed in the first attempt; the deal was
struck swiftly by Barclays’ few days later.
Thus, the merger between Barclays Capital and
Lehman Brothers Inc. has marked a worthwhile acquisition on the Barclays side—approximately
This report examines various aspects of the deal which includes impact on share
prices, strategies of the acquiring firm, key managerial issues, IT integration, and the emerging
financial structure after the deal.
Barclays (ticker symbol: BARC.L)
Barclays Capital offers financial services in the areas of managing foreign exchange,
interest rate, equity and commodity risks. There are three core areas of activities that Barclays
Capital specializes in—
for fixed income, foreign exchange, commodities, emerging
markets, money markets, prime services and equity products;
including loans and
investment grade and high-yield bonds; and
that involves opportunities to buy
privately transacted equities of private companies around the globe. The South African
subsidiary, Absa, handles the investment banking tasks in addition to those of Barclays. More
details of Barclays’ history can be seen in exhibit 1 in the appendix.
Lehman Brothers (ticker symbol: LEH)
Lehman operated as a global investment bank that served corporations, governments and
municipalities, institutional clients, and wealthy individuals. Lehman engaged fully in the sales
N. Moore, Heidi, The Wall Street Journal, “Who Wants to Buy Lehman Brothers?” The Wall Street, June 9, 2008,