Mergers & Acquisitions: Lehman Buys Neuberger Berman, Including $6.3B of

Lehman Brothers Holdings Inc. announced that its $2.6 billion acquisition of investment advisory company Neuberger Berman Inc. earlier this week will bring the firm about $6.3 billion in municipal bond assets under management.

The planned merger follows Lehman's acquisition of Lincoln Capital Management's fixed-income business, announced in December.

As Lehman has continued to look toward diversifying its revenues with the fee-based asset management business, the firm's planned acquisition of Neuberger represents its first significant foray into equity asset management, according to Daniel Goldberg, an analyst at Bear, Stearns & Co. But fixed income also comprises about 35% of assets under management at Neuberger, Goldberg added.

Neuberger manages about $4.5 billion in municipal bonds, according to a firm spokesman. The firm also manages $750 million in closed-end muni bond mutual funds and another $1 billion in a tax-exempt money market fund, the spokesman said. Neuberger also runs a smaller $75 million open-end intermediate bond fund.

"The acquisition of Neuberger Berman's private asset management business will position Lehman Brothers as one of the industry's leading providers of services to high-net-worth investors," a statement released by the two firms said.

Neuberger will become part of the wealth and asset management division -- launched last year within client services at Lehman -- under the direction of Theodore P. Janulis. Lehman will have over $100 billion in assets under management after acquiring Neuberger's total assets of $63.7 billion.

The transaction, while approved by the boards of directors of both companies, remains subject to the approval of Neuberger shareholders and to other closing conditions, regulatory approvals, and termination events.