Lehman Bros. to sell 55% share of key business

NEW YORK — Lehman Bros., in a desperate bid to survive, announced plans Wednesday to sell a 55 percent stake in its prized investment management business and said a sale of the entire company was possible.

Lehman, battling the nation's worst financial crisis since the Depression, also said it would spin off a troubled real estate unit and slash its dividend. Those moves come as the nation's fourth-largest investment bank reported an almost $4 billion third-quarter loss, boosting its losses so far this year to about $6.5 billion.

The plan was aimed at raising capital and regaining investor confidence in the 158-year-old firm.

It was also seen as a reconstruction of Lehman Bros., which has been devastated as the housing slump evolved into a global credit crunch in the past year.

Chief Executive Richard Fuld said the firm was in late-stage talks with potential buyers for the stake in the investment management business. Analysts value that business at up to $10 billion.

Lehman will also spin off $25 billion to $30 billion of commercial real estate investments into a separate publicly traded company, to be called Real Estate Investments Global, in the first quarter of 2009. Financial regulators forced Lehman to mark down the value of those assets on its books, but those same restrictions will not be placed on the new company.

Investors got more bad news after the company slashed its dividend from 68 cents per share to 5 cents per share, in a move that will save an estimated $450 million a year.

The stock has plunged more than 80 percent this year to lows not seen in more than a decade. It fell 54 cents Wednesday to close at $7.25. Shares (LEH:NYSE) plunged 45 percent on Tuesday.