Lehman Brothers (LEH) which closed last Friday at $16.09, hit an intraday high of $17.53 today, although it has since pulled back for a gain of only $0.31 on confirmation that Korea Development Bank is interested in the company.

In an interview last week, the CEO of Korea Development Bank Min Euoo-sung, said that discussions were under way “to form a consortium with private banks as we believe it is more desirable to acquire Lehman Brothers jointly rather than alone.”

Lehman (LEH) is supposedly looking for Korea Development Bank to invest roughly $6 billion for a twenty five percent stake, which means that Lehman (LEH) has internal an valuation of $24 billion on the company although we don’t know if they are including Lehman’s (LEH) asset management division, which includes Neuberger Berman that Lehman (LEH) supposedly has been shopping around. It is expected that Neuberger Berman could fetch up to $10 billion in a sale. Lehman’s (LEH) current market capitalization is $11.54 billion.

Whether a purchase by Korea Development Bank in whole or in part of Lehman (LEH), will actually go through, is a major unknown right now, as they have had disagreements on price. Also, Korea Development Bank may not be able to line up other partners to form a consortium.

Korea Development Bank might have a strong bias towards investing in Lehman (LEH) as the CEO Min Euoo-sung, used to head up the Korean division of Lehman (LEH) however, other banks might be reticent to invent in such a troubled asset.

tags: Lehman Brothers