Lehman may face hostile bid, raised to "buy": report

NEW YORK (Reuters) - Lehman Brothers Holdings Inc LEH.N was raised on Thursday to "buy" from "neutral" by Ladenburg Thalmann & Co analyst Richard Bove, who said the Wall Street investment bank might become the target of a hostile takeover bid.

"The market is at a stand-off," Bove wrote in a note to investors. "Investors are unwilling to accept any positive view of the company; management is unwilling to sell out at a deeply distressed value. The stage is set for a hostile bid to take over the whole company."

Lehman did not return a call seeking comment.

Bove lowered his price target for Lehman's shares to $20 from $23, but the lowered target is roughly 50 percent above where the shares have been trading.

Lehman shares were down 50 cents, or 3.6 percent, at $13.23 in afternoon trading on the New York Stock Exchange. Earlier they were down as much as 8.7 percent at $12.54, but pared some losses after the upgrade.

Lehman has taken a roughly $7 billion hit from write-downs and losses since the global credit crisis started a year ago.

The fourth-largest U.S. investment bank may sell at least part of its asset management business, which includes the Neuberger Berman unit, people close to the matter said this week. Lehman's market value was about $9.5 billion on Wednesday, Reuters data showed.

Bove wrote that if one assumes Neuberger Berman is worth $9 billion to $13 billion, then the rest of New York-based Lehman "is being valued at less than zero."

"A deep pocket buyer would not be under any pressure to sell any assets," Bove wrote. "It could sell Neuberger for more than the value of the whole company and basically own Lehman Brothers for nothing. Will it happen? I do not know. Should it happen? Absolutely, opportunities like this are rarely evident in the markets."

He added that Lehman management, led by Chief Executive Richard Fuld, is unwilling to sell some of its real estate securities and loans at fire-sale prices.

(Reporting by Jonathan Stempel; Additional reporting by Dan Wilchins)