Uncovering another dire quarter, with $5.6 billion in net writedowns and a worse-than-expected $3.93 billion loss, Lehman Brothers said it plans to sell a majority stake in its investment management division and spin off commercial real estate assets. The Koreans aren’t buying — they officially ran for the hills overnight — and Lehman also moved to dump other assets before announcing its results. It said in a filing it was chopping its stake in BHP Billiton almost in half, to below 3 percent. Back when Korea Development Bank was still interested in a Lehman stake, the word was that the two sides were having trouble agreeing on a price. Analyst Dick Bove said the bank was refusing to take what it believed were fire sale prices for its key assets. The question now is whether the offer of a majority stake in its investment division represents a change of heart — one that could smack of desperation for a market all too ready to believe the worst.

Other deals of the day:

* Coca-Cola plans to seek approval under China’s antitrust law for its $2.5 billion bid for top domestic juice-maker China Huiyuan Juice Group, the final obstacle to what would be the largest foreign takeover of a local firm, Huiyuan said.

* Infosys Technologies , India’s second-largest software services exporter, said it was confident its bid for Britain’s Axon Group would succeed and there was no rival bid on the table at the moment.

Buyout firms get a bad rap and there isn’t enough perception of the good that the private equity industry does, said Blackstone Chief Operating Officer Tony James on Tuesday.

“We had the dubious distinction of being like a public punching bag for a year — by politicians, by press, by just about everyone,” James said at a Lehman Brothers financial services conference. “And for better, for worse, I think people sometimes lose sight of what private equity actually does.”

Showing a slide titled “Private Equity is Good for Society,” James said private equity played a necessary role in modern capital markets and in creating jobs. In Blackstone’s case, that’s 42,000 new jobs in the last five years.

James said that public markets were great for companies with robust growth prospects and ones that meet their targets, but they can be “brutal” for those that fall behind.

Private equity, he said, can take companies whose stocks are “bashed down, bring them private, bring in a new management team — which is usually necessary — re-engineer the company, get it growing again, and when it emerges back in the public markets it will be a faster-growing company, fitting more comfortably into the public markets.”

That’s particularly important in tumultuous times such as now, he said, when people are casting about for big pockets, rescue financing and investors willing to take risks when no one else will.

“That’s when we shine,” James said.

For James’ other remarks about the buyout industry click here.

With the clock ticking down on its Lipitor patent, Pfizer is under pressure for the next big thing. With that in mind, talk that German drugs and chemicals group Bayer could be in its sights is not hard to swallow. Shares of Bayer, a $57 billion company, rose nearly 4 percent on the talk. It has a healthy pipeline of new drugs and an attractive over-the-counter medicines business, but it also has agro-chem and plastics businesses it might have to shed to make itself more Pfizer friendly.

In 2000, Pfizer bought Warner Lambert, picking up sole possession of Lipitor, but also acquiring Dentyne chewing gum, Schick razors and an assortment of other non-Pfizery concerns that they were forced to keep for two years as part of that deal, and – Lipitor aside – Pfizer’s share price has hardly been a stellar performer since it paid $90 billion for Warner Lambert. It’s lost half its value since a near-$39 peak in February 2004, so Pfizer shareholders focused on the next big thing could also be a bit wary of taking on a big takeover.

Bayer is a top player in insecticides, fungicides and herbicides. There are companies with the cash and interest to take on Bayer’s agro and other non-drugs chemical revenues – the businesses earned more than $20 billion in ‘07. Such companies – BASF comes to mind – would probably face anti-trust issues in acquiring these businesses from Bayer, but what’s a good strategic merger strategy without anti-trust issues.

Other deals of the day:

* UK gas producer BG Group admitted defeat in its hostile bid for Australian coal-bed methane producer Origin Energy, but analysts said BG may shift its focus to another target or become a target itself. BG said in a statement it would not increase or extend its A$15.50/share offer, which closes on Sept. 26, and said it expected the offer to lapse, after Origin formed an $8 billion joint venture with U.S. oil major ConocoPhillips.

* A top shareholder in Daewoo Shipbuilding and Marine Engineering said it had received four preliminary bids for a majority stake in the world’s No. 3 shipbuilder.

* China’s top offshore oil company, CNOOC, has taken over a refining and chemical firm in eastern Shandong, its first strong toehold in a leading regional oil market that is home to many independent Chinese refiners. CNOOC took effective control of Shenzhen-listed Shandong Haihua after the local government in Weifang city in Shandong gave CNOOC 51 percent of the parent, Shandong Haihua Group, the listed unit said in a statement to the Shenzhen Stock Exchange.

After months of trying to sell its rail leasing business, CIT pulled the plug on the auction, saying it no longer needed to do so.

CIT decided to keep its $4.5 billion rail franchise as a result of the progress it had made managing its balance sheet and strengthening its liquidity position, it said. 

“We are very pleased with the progress we have made in securing more than $11 billion in liquidity over the past five months,” CEO Jeffrey Peek said. 

Sources told us last month that the auction had become a bit of a drag. The credit crisis was making it difficult for potential buyers to come up with financing. And GE spoiled the party by putting its own rail car business on the market around the same time, so that the two units were competing for buyers. GE may also have an advantage luring buyers, as it can possibly provide at least some seller financing for its business.

These businesses can be attractive. Returns on investment for rail car leases are often over 15 percent a year and with the price of scrap metal rising, the value of rail cars is also rising.

But in these conditions, finding somebody to pay a premium can be tough.

(Photo credit: Reuters)

Uncovering another dire quarter, with $5.6 billion in net writedowns and a worse-than-expected $3.93 billion loss, Lehman Brothers said it plans to sell a majority stake in its investment management division and spin off commercial real estate assets. The Koreans aren’t buying — they officially ran for the hills overnight — and Lehman also moved to dump other assets before announcing its results. It said in a filing it was chopping its stake in BHP Billiton almost in half, to below 3 percent. Back when Korea Development Bank was still interested in a Lehman stake, the word was that the two sides were having trouble agreeing on a price. Analyst Dick Bove said the bank was refusing to take what it believed were fire sale prices for its key assets. The question now is whether the offer of a majority stake in its investment division represents a change of heart — one that could smack of desperation for a market all too ready to believe the worst.

Other deals of the day:

* Coca-Cola plans to seek approval under China’s antitrust law for its $2.5 billion bid for top domestic juice-maker China Huiyuan Juice Group, the final obstacle to what would be the largest foreign takeover of a local firm, Huiyuan said.

* Infosys Technologies , India’s second-largest software services exporter, said it was confident its bid for Britain’s Axon Group would succeed and there was no rival bid on the table at the moment.

Buyout firms get a bad rap and there isn’t enough perception of the good that the private equity industry does, said Blackstone Chief Operating Officer Tony James on Tuesday.

“We had the dubious distinction of being like a public punching bag for a year — by politicians, by press, by just about everyone,” James said at a Lehman Brothers financial services conference. “And for better, for worse, I think people sometimes lose sight of what private equity actually does.”

Showing a slide titled “Private Equity is Good for Society,” James said private equity played a necessary role in modern capital markets and in creating jobs. In Blackstone’s case, that’s 42,000 new jobs in the last five years.

James said that public markets were great for companies with robust growth prospects and ones that meet their targets, but they can be “brutal” for those that fall behind.

Private equity, he said, can take companies whose stocks are “bashed down, bring them private, bring in a new management team — which is usually necessary — re-engineer the company, get it growing again, and when it emerges back in the public markets it will be a faster-growing company, fitting more comfortably into the public markets.”

That’s particularly important in tumultuous times such as now, he said, when people are casting about for big pockets, rescue financing and investors willing to take risks when no one else will.

“That’s when we shine,” James said.

For James’ other remarks about the buyout industry click here.

With the clock ticking down on its Lipitor patent, Pfizer is under pressure for the next big thing. With that in mind, talk that German drugs and chemicals group Bayer could be in its sights is not hard to swallow. Shares of Bayer, a $57 billion company, rose nearly 4 percent on the talk. It has a healthy pipeline of new drugs and an attractive over-the-counter medicines business, but it also has agro-chem and plastics businesses it might have to shed to make itself more Pfizer friendly.

In 2000, Pfizer bought Warner Lambert, picking up sole possession of Lipitor, but also acquiring Dentyne chewing gum, Schick razors and an assortment of other non-Pfizery concerns that they were forced to keep for two years as part of that deal, and – Lipitor aside – Pfizer’s share price has hardly been a stellar performer since it paid $90 billion for Warner Lambert. It’s lost half its value since a near-$39 peak in February 2004, so Pfizer shareholders focused on the next big thing could also be a bit wary of taking on a big takeover.

Bayer is a top player in insecticides, fungicides and herbicides. There are companies with the cash and interest to take on Bayer’s agro and other non-drugs chemical revenues – the businesses earned more than $20 billion in ‘07. Such companies – BASF comes to mind – would probably face anti-trust issues in acquiring these businesses from Bayer, but what’s a good strategic merger strategy without anti-trust issues.

Other deals of the day:

* UK gas producer BG Group admitted defeat in its hostile bid for Australian coal-bed methane producer Origin Energy, but analysts said BG may shift its focus to another target or become a target itself. BG said in a statement it would not increase or extend its A$15.50/share offer, which closes on Sept. 26, and said it expected the offer to lapse, after Origin formed an $8 billion joint venture with U.S. oil major ConocoPhillips.

* A top shareholder in Daewoo Shipbuilding and Marine Engineering said it had received four preliminary bids for a majority stake in the world’s No. 3 shipbuilder.

* China’s top offshore oil company, CNOOC, has taken over a refining and chemical firm in eastern Shandong, its first strong toehold in a leading regional oil market that is home to many independent Chinese refiners. CNOOC took effective control of Shenzhen-listed Shandong Haihua after the local government in Weifang city in Shandong gave CNOOC 51 percent of the parent, Shandong Haihua Group, the listed unit said in a statement to the Shenzhen Stock Exchange.

After months of trying to sell its rail leasing business, CIT pulled the plug on the auction, saying it no longer needed to do so.

CIT decided to keep its $4.5 billion rail franchise as a result of the progress it had made managing its balance sheet and strengthening its liquidity position, it said. 

“We are very pleased with the progress we have made in securing more than $11 billion in liquidity over the past five months,” CEO Jeffrey Peek said. 

Sources told us last month that the auction had become a bit of a drag. The credit crisis was making it difficult for potential buyers to come up with financing. And GE spoiled the party by putting its own rail car business on the market around the same time, so that the two units were competing for buyers. GE may also have an advantage luring buyers, as it can possibly provide at least some seller financing for its business.

These businesses can be attractive. Returns on investment for rail car leases are often over 15 percent a year and with the price of scrap metal rising, the value of rail cars is also rising.

But in these conditions, finding somebody to pay a premium can be tough.

(Photo credit: Reuters)