NEW YORK (Reuters) - Contrary to market speculation, Goldman Sachs Group Inc (GS.N) is not pursuing an acquisition of Lehman Brothers Holdings Inc LEH.N, reflecting concerns that integrating two investment banks would be too disruptive, sources familiar with the situation said on Thursday.
As Lehman stock plunged 46.5 percent to a new low of $3.88 a share, there was speculation that Goldman, the largest and strongest securities firm on Wall Street, would step in and acquire its struggling rival.
While reporting a $3.9 billion third-quarter net loss and a series of restructuring plans, Lehman on Wednesday also said it was “examining all strategic alternatives to maximize shareholder value.” Some analysts and investors interpreted the remark as meaning that Lehman was looking to sell the firm.
Goldman declined to comment, citing its policy on market speculation. Lehman also declined to comment.
Taking over Lehman would be a risky and daunting task for Goldman, particularly in the depths of a global financial crunch, the sources told Reuters.
Lehman had 25,935 employees at the end of August, not that many fewer than the 31,495 who worked at Goldman at the end of May. Goldman will report its third-quarter results next week.
The two firms are engaged in essentially all the same businesses, so that there would be considerable overlap.
And while Goldman has largely avoided major damage from mortgage securities and buyout financing, it would still be a tall order to absorb a firm with a large amount of risky and illiquid assets.
Lehman on Wednesday said its books at the end of August included $33 billion of commercial mortgages and property; $13 billion of residential mortgages; $4.6 billion of “other asset-backed positions,” such as CDOs; and $10.4 billion of acquisition financing.
In afternoon trading, Lehman shares had recovered slightly but were still down 36.9 percent or $2.67 to $4.58. Goldman Sachs shares were down 2 percent or $3.10 to $154.49.
Reporting by Joseph A. Giannone, editing by Maureen Bavdek and Gerald E. McCormick