The Bear Sterns Equity Strip Model

Implications: Unlikely that a suitor firm will take over Lehman directly by itself without assistance, perks or partners. As you may recall Bear Stearns in a similar situation, and remember that the Feds had to lend and assist JP Morgan with the acquisition.

Analysis: This weekend behind closed doors, we assume the Fed will look at the top 5 suitors by strength, and propose a package for Lehman purchase.

Various suitors have been discussed, B of A has been mentioned, although they are still assimilating the Countrywide (CFC) purchase.

Makes sense, that if the Feds are providing consultation and package incentives to the suitor, that the suitor company would be better off NOT going it alone for acquisitions.