Lehman wins final Archstone stake for $1.58B

May 25, 2012 09:30AM

Lehman Brothers Holdings has beaten out Sam Zell and acquired the last remaining 26.5 percent stake in Archstone for $1.58 billion, the Wall Street Journal reported, giving it complete ownership over the massive apartment portfolio. The failed bank is buying the stake from Bank of America and Barclays, which partnered with Lehman to acquire Archstone in 2007 for $22 billion. The deal values the portfolio at $17 billion.

Since 2007 Lehman had held a 47 percent stake in Archstone. When the U.S. rental market began its meteoric rise last year, it couldn’t come to an agreement with BofA and Barclays as to how to manage the portfolio. The latter group wanted to sell the company, while Lehman wanted to take it public.

Sensing the discord, Sam Zell’s Equity Residential — Archstone’s biggest competitor — bid $1.33 billion to acquire half of the non-Lehman-owned stake. Lehman matched that bid. Lately, Zell has been bidding higher and higher for the remaining stake, before Lehman reached the $1.58 billion deal. Though he didn’t win the portfolio, Zell will be compensated $150 million: $80 million from a breakup fee and $70 million from Lehman. [WSJ]