NEW YORK (Reuters) – The deadline for potential counterbids for Lehman Brothers Holding’s (LEHMQ.PK: Quote, Profile, Research, Stock Buzz) prized Neuberger asset management arm was extended for a second time on Monday to 9:00 pm (02:00 GMT Tuesday) from noon on Monday, according to a court filing.
Sale of the unit to Bain Capital LLC and Hellman & Friedman LLC was agreed to on Sept. 29 for $2.15 billion, two weeks after Lehman Brothers Holdings filed for bankruptcy protection.
A bankruptcy court in October set a deadline for other parties to submit bids by Dec. 1 at noon New York time, and scheduled an auction for Dec. 3. A court filing on Monday said that the bid deadline had been extended to 7:00 pm, and a later filing said this had been extended to 9.00 pm.
It was unclear whether the delays were made in order to accommodate another bid.
It was also unclear whether rival private equity firm Carlyle Group [CYL.UL] would bid.
Carlyle, together with former Neuberger Berman Chief Executive Jeffrey Lane, have previously said they were interested in Neuberger. In October they filed an objection to the sale to Bain and Hellman & Friedman, claiming the price paid 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 Oct. 14, that it intended to bid if the process was modified.
An attorney for Carlyle said in court later in October that 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 three months for the Lehman unit to complete, lawyers said at the time of the Oct. 16 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.
One potential issue in the auction is a steep fall in the S&P 500 Index since the Bain and Hellman & Friedman deal was signed.
A condition for the deal is that the average closing price of the S&P 500 Index for the 10 trading days prior to the deal’s close needs to be at least 902. The S&P .SPX is currently trading around 833 points.
The buyers can, however, waive that condition if they choose, according to a copy of the purchase agreement.
DRAWN OUT PROCESS
The whole sales process for Neuberger has been drawn out. Lehman originally put a majority 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, TPG, Silver Lake, Blackstone Group (BX.N: Quote, Profile, Research, Stock Buzz) and Clayton Dubilier & Rice, sources previously said.
After Lehman’s September bankruptcy filing, the whole unit was marketed. Bidders were whittled down to the winning team of Bain Capital LLC and Hellman & Friedman LLC.
Some estimates originally valued the unit between $8 billion and $10 billion, although 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.
In addition, values of publicly-traded asset managers have declined significantly since the unit was first marketed.
The Dow asset managers index .DJUSAG has fallen about 29 percent since the deal was announced on Sept. 29.
By Megan Davies
(Additional reporting by Emily Chasan in New York) (Editing by Phil Berlowitz, Bernard Orr)