NEW YORK (Reuters) - A deal to sell Lehman Brothers Holding’s LEHMQ.PK prized Neuberger asset management arm to two private equity firms could be challenged on Monday if any rival bidders emerge to counterbid by a noon deadline.
The $2.15 billion sale of the unit to Bain Capital LLC and Hellman & Friedman LLC was agreed on September 29, two weeks after Lehman filed for bankruptcy protection.
A bankruptcy court in October set a deadline for other parties to submit bids by December 1 at 12:00 noon New York time, and scheduled an auction for December 3.
It was unclear on Sunday if any counterbids would be lodged.
In October, rival private equity firm Carlyle Group CYL.UL and former Neuberger Berman Chief Executive Jeffrey Lane filed an objection to the sale, claiming the price was too low and violated Lehman’s obligation to maximize the value of its asset sales to pay off creditors.
Carlyle said in that document, dated October 14, that it intended to bid if the bidding process was modified.
An attorney for Carlyle said in court later in October it believed the client consent solicitation gives Bain and Hellman an unfair advantage that may prevent it bidding.
Under U.S. law, asset management clients are required to give consent for a transfer of their assets to a new holder, a process which could take about 3 months for the Lehman unit to complete, lawyers said during the hearing.
While Judge James Peck said at the hearing he had some concerns about the client consent process, ultimately he accepted the condition, saying he believed there was no better alternative at that time.
The whole sales process for Neuberger has been drawn out. Lehman originally put a majority percentage of the prized asset management arm up for sale in August.
The unit, one of Lehman’s best performing assets, drew interest from a number of private equity bidders such as Kohlberg Kravis Roberts & Co KKR.UL, TPG TPG.UL, Silver Lake SILAK.UL, Blackstone Group (BX.N) and Clayton Dubilier & Rice, sources previously said.
After Lehman’s September bankruptcy filing, the whole of the asset was put on the market. Bidders were whittled down to the winning team of Bain and Hellman & Friedman.
Some estimates originally valued the unit at $8-$10 billion, though it is hard to do an apples-to-apples comparison of the price partly because, at various points of the sale process, different parts of the business were being offered for sale.
Carlyle declined comment.
Additional reporting by Emily Chasan, Editing by Ian Geoghegan