Filed by Lehman Brothers Holdings Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 under the
Securities Exchange Act of 1934
Subject Company: Neuberger Berman Inc.
Commission File No. 001-15361
Date: July 22, 2003
The attached document contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements include, but are not limited to, (i) statements about the benefits
of the acquisition of Neuberger Berman by Lehman Brothers, including financial
and operating results, synergy benefits and any accretion to reported earnings
that may be realized from the acquisition; Lehman Brothers' and Neuberger
Berman's plans, objectives, expectations and intentions and other statements
contained in this presentation that are not historical facts; and (ii) other
statements identified by words such as "expects," "anticipates," "intends,"
"plans," "believes," "seeks," "estimates" or words of similar meaning. These
forward-looking statements are based upon management's current beliefs or
expectations and are inherently subject to significant business, economic and
competitive uncertainties and contingencies and third-party approvals, many of
which are beyond our control. The following factors, among others, could cause
actual results to differ materially from the those described in the
forward-looking statements: (1) whether the stockholders of Neuberger Berman
approve the proposed transaction; (2) the satisfaction of the other conditions
specified in the merger agreement, including without limitation the receipt of
required governmental and other third-party approvals of the proposed
transaction; (3) the ability to successfully combine the businesses of Lehman
Brothers and Neuberger Berman; (4) the realization of revenue and cost synergy
benefits from the proposed transaction; (5) operating costs, customer loss and
business disruption following the merger, including adverse effects on
relationships with employees; (6) changes in the stock market and interest
rate environment that affect revenues; and (7) competition. Lehman Brothers
and Neuberger Berman do not undertake any obligation to update any
forward-looking statement to reflect circumstances or events that occur after
the date such forward-looking statement is made.
The attached document shall not constitute an offer of any securities for
sale. The proposed transaction will be submitted to Neuberger Berman's
stockholders for their consideration. Lehman Brothers and Neuberger Berman
will file a registration statement, a proxy statement/prospectus and other
relevant documents concerning the proposed transaction with the SEC.
Stockholders of Neuberger Berman are urged to read the registration statement
and the proxy statement/prospectus and any other relevant documents filed with
the SEC when they become available, as well as any amendments or supplements
to those documents, because they will contain important information.
Stockholders of Lehman Brothers can obtain more information about the proposed
transaction by reviewing the Form 8-K filed by Lehman Brothers in connection
with the announcement of the transaction, and any other relevant documents
filed with the SEC when they become available.
You will be able to obtain a free copy of the proxy statement/prospectus, as
well as other filings containing information about Lehman Brothers and
Neuberger Berman, at the SEC's Internet site (http://www.sec.gov). Copies of
the proxy statement/prospectus and the SEC filings that will be incorporated
by reference in the proxy statement/prospectus can be obtained, without
charge, by directing a request to Lehman Brothers, Investor Relations, 745
Seventh Avenue, New York, New York 10019
2
(212-526-3267) or to Neuberger Berman, Corporate Communications, 605 Third
Avenue, New York, New York 10158 (212-476-8125).
Lehman Brothers, Neuberger Berman and their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies from
the stockholders of Neuberger Berman in connection with the proposed
transaction. Information about the directors and executive officers of Lehman
Brothers is set forth in the proxy statement on Schedule 14A, dated February
28, 2003, for Lehman Brothers' 2003 annual meeting of stockholders.
Information about directors and executive officers of Neuberger Berman and
their ownership of Neuberger Berman common stock is set forth in the proxy
statement on Schedule 14A, dated April 16, 2003, for Neuberger Berman's 2003
annual meeting of stockholders. Additional information regarding participants
in the proxy solicitation may be obtained by reading the proxy
statement/prospectus regarding the proposed transaction when it becomes
available.
* * *
The following FAQ's/Transaction Talking Points was distributed to certain
employees of Lehman Brothers on July 22, 2003.
* * *
FAQ's/Transaction Talking Points
Note: To the extent you communicate with clients of Lehman Brothers concerning
the transaction, you should be aware that such clients may be Neuberger Berman
shareholders. Accordingly, you should not communicate information either
orally or by email about the transaction that would be of interest to the
investing public at large that goes beyond the information in the press
release or these talking points. The investor presentation will also be
available on a delayed basis starting on Wednesday, July 23. You should,
however, feel welcome to inform Lehman Brothers clients about Neuberger Berman
services and the extent to which Lehman Brothers will be better able to
serve its clients as a result of the transaction. If you are unsure whether
you are sending out information that could be viewed as problematic, please
feel free to ask Jeff Welikson or Oliver Budde in our legal department.
1. Rationale
Why are you acquiring Neuberger Berman?
o 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
o The addition will bring Lehman Brothers' client assets under
management to over $100 billion
o Neuberger Berman will expand Lehman Brothers' capabilities in the
areas of mutual funds, wrap accounts, institutional separate
accounts, and alternative investments
3
o Lehman Brothers will provide Neuberger Berman's clients with access
to an expanded range of investment products and services to manage
risk or seek enhanced returns, including structured capital markets
products, private equity, and other alternative and asset management
products
o Neuberger Berman's comprehensive portfolio of money management
products will create incremental product opportunities to be
distributed through Lehman Brothers' global network of institutional
and high-net-worth clients
o The combination is expected to further enhance Lehman Brothers'
revenue diversification and earnings stability, raising the
percentage of revenues from its Client Services Segment from 13% to
21%, on a pro forma basis for 2002
2. Terms of the Transaction
o Based on its closing price as of July 21, 2003, Lehman Brothers will
be paying an implied price of $41.48 per share for the 68.4 million
primary shares of Neuberger Berman (excluding 1.6 million unvested
restricted shares in employee compensation plans)
o Pursuant to the definitive agreement, each share of Neuberger Berman
will be exchanged for $9.49 in cash and a fractional share of Lehman
Brothers common stock based on the average trading price of Lehman
Brothers common stock during a period of time shortly prior to
closing. The exchange ratio would be fixed at 0.496 if the average
stock price during that period were $66.51 or less. If the average
stock price were greater than $66.51 but not more than $73.00, the
exchange ratio would vary so that Neuberger Berman shareholders
would receive total per share consideration of $42.50. Above $73.00,
the exchange ratio mechanics vary subject to a minimum exchange
ratio of 0.411 if the average stock price were above $90.41
What is the value of the transaction?
o The enterprise value of the transaction is $2.625 billion-
consisting of the $41.48 for each primary share, plus $42 million in
in-the-money options and less $255 million in net excess cash as of
June 30, 2003, and excluding 1.6 million unvested restricted shares
in employee compensation plans
When will the transaction close?
o The transaction is expected to close by the end of Lehman Brothers'
fiscal fourth quarter
How will you be able to retain employees? Is there an adequate retention pool?
o As part of the overall transaction, the 32 active Neuberger Berman
partners who lead most of the wealth management teams will convert
their Neuberger Berman stock,
4
including approximately $941 million in shares subject to transfer
restrictions, into Lehman Brothers stock and cash on the same basis
as the public shareholders. All Lehman Brothers stock received in
exchange for these restricted shares will continue to be subject to
similar transfer restrictions
o The 32 active Neuberger Berman founders are all subject to
non-compete and non-solicitation agreements
o Additionally, Lehman Brothers will establish a $120 million
retention pool for key producers, subject to vesting
o Finally, 1.6 million shares of restricted Neuberger stock with a
value of $68 million will be exchanged for Lehman Brothers
restricted stock and restricted cash, subject to continued vesting
3. Neuberger Berman
Who is Neuberger Berman?
o Founded in 1939 by Roy Neuberger
o One of the most respected and successful private wealth and asset
management firms in the industry
o Became a public company in 1999 (NYSE: NEU)
o Headquartered in New York, Neuberger Berman has over 1,200 employees
in 19 offices located in 17 cities in the U.S.
o 100 portfolio managers with average industry experience of over 20
years
What are its businesses?
o Private Asset Management, which manages approximately $24 billion in
assets for high-net-worth clients throughout the U.S. Provides
personalized money management, trust, advisory, and wealth planning
services
o Mutual Fund and Institutional Business, which manages $39.7 billion
in assets
o Professional Securities Services, which offers prime brokerage and
correspondent clearing, securities lending, prime brokerage, and
other custodial services
4. Lehman Brothers' Client Services Segment's Wealth and Asset Management
Division
What is Lehman Brothers' Wealth and Asset Management Division?
5
o Formed in 2002 in order to enhance the focus of private client and
asset management initiatives globally
o Over 1,300 employees as of June 30, 2003
What are the businesses?
o Asset Management platform which provides both individual and
institutional clients investment advisory expertise through various
entities, including Lincoln Capital Fixed Income Management Company,
Lehman Brothers Alternative Investment Management, and additional
Lehman Brothers investment funds (private equity, real estate,
venture capital)
o Private Client Services, with app. 450 brokers serving
high-net-worth investors throughout 14 offices, globally
5. Structure
How will Neuberger Berman fit into the Lehman Brothers organization?
o Neuberger Berman will become a business unit within the Wealth and
Asset Management Division
Will any of Neuberger's directors be joining Lehman Brothers' board?
o None of its directors will join the Lehman Brothers' board
Will Neuberger Berman retain its name?
o Yes, we expect to operate it under the Neuberger Berman brand
Won't there be overlap between the combined businesses?
o There is limited overlap with Wealth and Asset Management in terms
of products and functionality which should help ensure a smooth
integration process
What does this structure mean for Lehman Brothers' WAM employees?
o Our asset management and high-net-worth platforms are now much
larger and we have the ability to leverage the combined strengths of
Neuberger Berman and WAM
Will Neuberger move into Lehman Brothers' facilities in New York and in the
other U.S. locations?
o No, we have no present plans to move facilities.
6. Leadership
What is the reporting structure?
o Neuberger Berman will become part of the Client Services Segment's
Wealth and Asset Management Division (WAM), which is headed by Ted
Janulis
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o Jeff Lane, CEO of Neuberger Berman, will become a vice chairman of
Lehman Brothers, a member of the Office of the Chairman, chairman of
WAM, and chairman of Neuberger Berman
o Bob Matza, will become president and remain chief operating officer
of Neuberger Berman. In addition, Mr. Matza will join Lehman
Brothers' Management Committee
7. Client Relationships
What does this transaction mean to our WAM clients?
o The addition of Neuberger Berman will expand our capabilities,
particularly in the areas of wrap accounts, mutual funds,
institutional separate accounts, and alternative investments
Where are the revenue synergies?
o We will sell Neuberger Berman products and services to existing
Lehman Brothers' clients and sell Lehman Brothers' products and
services to Neuberger Berman's retail and institutional clients
8. Employee Concerns
Will there be redundancies as a result of this transaction?
o As we noted in the press release, one of the attractions of this
business combination is that there is very little overlap in our
business platforms
o However, we do expect to find certain areas of overlap in some of
the support and control (back office) areas. We will be going
through a process to identify those areas of overlap over the next
four months and expect limited headcount reductions in certain
support units
# # #
This document contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements include, but are not limited to, (i) statements about the benefits
of the acquisition of Neuberger Berman by Lehman Brothers, including financial
and operating results, synergy benefits and any accretion to reported earnings
that may be realized from the acquisition; Lehman Brothers' and Neuberger
Berman's plans, objectives, expectations and intentions and other statements
contained in this presentation that are not historical facts; and (ii) other
statements identified by words such as "expects," "anticipates," "intends,"
"plans," "believes," "seeks," "estimates" or words of similar meaning. These
forward-looking statements are based upon management's current beliefs or
expectations and are inherently subject to significant business, economic and
competitive uncertainties and contingencies and third-party approvals, many of
which are beyond our control. The following factors, among others, could cause
actual results to differ materially from the those described in the
forward-looking statements: (1) whether the stockholders of Neuberger Berman
approve the proposed transaction; (2) the satisfaction of the other conditions
specified in the merger agreement, including without limitation the receipt of
required governmental and other third-party
7
approvals of the proposed transaction; (3) the ability to successfully combine
the businesses of Lehman Brothers and Neuberger Berman; (4) the realization of
revenue and cost synergy benefits from the proposed transaction; (5) operating
costs, customer loss and business disruption following the merger, including
adverse effects on relationships with employees; (6) changes in the stock
market and interest rate environment that affect revenues; and (7)
competition. Lehman Brothers and Neuberger Berman do not undertake any
obligation to update any forward-looking statement to reflect circumstances or
events that occur after the date such forward-looking statement is made.
This document shall not constitute an offer of any securities for sale. The
proposed transaction will be submitted to Neuberger Berman's stockholders for
their consideration. Lehman Brothers and Neuberger Berman will file a
registration statement, a proxy statement/prospectus and other relevant
documents concerning the proposed transaction with the SEC. Stockholders of
Neuberger Berman are urged to read the registration statement and the proxy
statement/prospectus and any other relevant documents filed with the SEC when
they become available, as well as any amendments or supplements to those
documents, because they will contain important information. Stockholders of
Lehman Brothers can obtain more information about the proposed transaction by
reviewing the Form 8-K filed by Lehman Brothers in connection with the
announcement of the transaction, and any other relevant documents filed with
the SEC when they become available. You will be able to obtain a free copy of
the proxy statement/prospectus, as well as other filings containing
information about Lehman Brothers and Neuberger Berman, at the SEC's Web site
(http://www.sec.gov). Copies of the proxy statement/prospectus and the SEC
filings that will be incorporated by reference in the proxy
statement/prospectus can be obtained, without charge, by directing a request
to Lehman Brothers, Investor Relations, 745 Seventh Avenue, New York, New York
10019 (212-526-3267) or to Neuberger Berman, Corporate Communications, 605
Third Avenue, New York, New York 10158 (212-476-8125).
Lehman Brothers, Neuberger Berman and their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies from
the stockholders of Neuberger Berman in connection with the proposed
transaction. Information about the directors and executive officers of Lehman
Brothers is set forth in the proxy statement on Schedule 14A, dated February
28, 2003, for Lehman Brothers' 2003 annual meeting of stockholders.
Information about directors and executive officers of Neuberger Berman and
their ownership of Neuberger Berman common stock is set forth in the proxy
statement on Schedule 14A, dated April 16, 2003, for Neuberger Berman's 2003
annual meeting of stockholders. Additional information regarding participants
in the proxy solicitation may be obtained by reading the proxy
statement/prospectus regarding the proposed transaction when it becomes
available.