WaMu still weighing sale, capital raising

PHILADELPHIA/NEW YORK (Reuters) - Washington Mutual Inc, the large U.S. savings and loan beleaguered by mortgage losses, continues to explore all options, such as talking to potential buyers or raising capital, sources familiar with the situation said on Thursday.

Washington Mutual has yet to secure a quick takeover bid, although sources cautioned it was early in the auction process.

Potential suitors such as JP Morgan Chase & Co and Wells Fargo & Co have yet to submit formal offers, although negotiations are continuing with several parties that have expressed interest, sources said.

In addition to JP Morgan and Wells Fargo, the possible suitors include HSBC Holdings Plc and Citigroup Inc, a source familiar with the situation previously told Reuters.

WaMu still weighing sale, capital raising....

AIG to Get $85 Billion Loan, Give Up 80% Stake

American International Group will get an $85 billion loan from the federal government in exchange for an 80 percent stake in itself, sources have told CNBC.

Sources said the loan, which will allow AIG to avoid bankruptcy, will be secured and include incentives for quick asset-sales by AIG.

The deal severely dilutes existing shares of the company.

AIG has been racing the clock to avoid a bankruptcy filing on Wednesday, making efforts to work out a deal with the Federal Reserve to shore up its finances.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke met with Senate and House leadership Tuesday night to discuss how to assist AIG, sources said.

The Fed's financial aid for the troubled insurer marks a reversal of its decision on Monday to refuse a bridge loan to AIG.

The Fed met with the company's advisers throughout Tuesday and came to a better understanding of what is needed to help the company through its current crisis, people familiar with the negotiations told CNBC.

AIG to Get $85 Billion Loan, Give Up 80% Stake....

Government Officials Said to Consider AIG Conservatorship Plan

By Hugh Son, Craig Torres and Erik Holm

Sept. 16 (Bloomberg) -- Regulators are considering putting American International Group Inc. into conservatorship while the Federal Reserve is in talks about a ``loan package'' as time runs out for the insurer to raise cash, according to three people briefed on negotiations involving U.S. and state officials.

Executives from AIG, bankers and Treasury and Federal Reserve officials were meeting today at the New York Fed, said two of the people, who declined to be named because the talks are private. Treasury spokeswoman Michele Davis declined to comment. David Neustadt, a spokesman for New York State Insurance Superintendent Eric Dinallo, had no immediate comment.

AIG is trying to stave off a collapse after its credit ratings were cut yesterday and shares plunged 79 percent since Sept. 11. Goldman Sachs Group Inc. and JPMorgan Chase & Co., which have led efforts to find a private-sector solution, told the Fed such an effort would be difficult, one person said. The insurer fell another 40 percent in extended trading in New York on concern a government takeover would wipe out shareholders.

Government Officials Said to Consider AIG Conservatorship Plan....

Best Buy to acquire music-sharer Napster

By ASHLEY M. HEHER

CHICAGO (AP) — Napster Inc., the online music community that rose from a dorm room project to became the scourge of the global recording industry, is being purchased by Best Buy Inc. for nearly $127 million as the electronics retailer tries to boost its digital music business.

The $2.65 per share all-cash deal announced Monday is nearly double the music network's Friday closing price but a small sum to pay for Best Buy, which gets access to Napster's 700,000 subscribers who pay a monthly fee to access digital music catalogs.

"It's not a huge investment, but it definitely has brand recognition," said Morningstar analyst Brady Lemos, who said Best Buy also benefits from the acquisition of technical expertise about the digital music industry.

In a statement, Best Buy valued the deal at $121 million, and said the difference was due to unvested employee stock awards at Napster. According to its most recently quarterly filing, Napster had about 47.9 million shares outstanding as of Aug. 8, implying a price of $126.9 million.

Napster, a once-free file-sharing network incorporated in 2000, was a favorite tool among cheap college students earlier in the decade. But as the service gained popularity, the company became the sworn enemy of heavy metal band Metallica and along the way fueled a cultural, legal and political debate about copyrights and intellectual property while at the same time helping popularize digital music.

"We believe Best Buy will be an ideal partner for Napster and are very excited by the benefits that this transaction delivers to our shareholders, partners and employees," Napster Chairman and Chief Executive Chris Gorog said in a statement.

Best Buy to acquire music-sharer Napster....

EA walks away from Take-Two buyout

By BARBARA ORTUTAY

NEW YORK (AP) — Video game publisher Electronic Arts Inc. said Sunday it ended talks to buy smaller rival Take-Two Interactive Software Inc., best known for the "Grand Theft Auto" series of games.

EA, the publisher of games such as "Madden NFL 09" and "Spore," said it decided not to make an offer to buy Take-Two.

Redwood City, Calif.-based EA had signed a non-disclosure agreement with Take-Two in August after letting a deadline for a $2 billion tender offer to buy the company expire.

"EA is tracking toward a record-breaking year," said President and Chief Executive John Riccitiello, in a statement. Spokesman Jeff Brown said Sunday EA is "not at all" disappointed that things didn't work out.

Brown did not say what prompted EA to walk away from the discussions, but he said the company is confident in its own product portfolio. Take-Two, he added, was "never something EA needed."

Since making its offer public in February, EA has maintained that it was offering a "fair and full" price for New York-based Take-Two. And while keeping the total price of the bid at $2 billion, it lowered the original $26-per-share offer to $25.74 to account for restricted shares granted to Take-Two's management.

Take-Two, meanwhile, said the offer undervalued the company, and repeatedly rejected it.

EA walks away from Take-Two buyout....

Bankers say Lehman approaching rivals for lifeline

By JOE BEL BRUNO

NEW YORK (AP) — Its future in jeopardy and options dwindling, Lehman Brothers scoured Wall Street Thursday for a financial lifeline. Top executives contacted banks and rival investment houses about a possible deal to buy the company, bankers and industry executives close to the situation said.

The nation's fourth-largest investment bank, which had tenaciously resisted putting itself up for sale, finally relented after a free-fall in its stock price and growing doubts about whether other financial institutions would continue to do business with it, according to these officials. They asked not to be named because they are not authorized to comment publicly.

Government officials who asked for anonymity because of the sensitivity of the ongoing discussions said that a number of options were being explored and that no decisions had been reached on how any deal involving Lehman would be structured.

Bankers say Lehman approaching rivals for lifeline....

Lehman tries to soothe Wall Street with asset sale

By JOE BEL BRUNO

NEW YORK (AP) — Lehman Brothers put itself on the block Wednesday as part of a last-ditch effort to rescue the investment bank from bad bets on real estate-related holdings that have already laid low other storied Wall Street firms.

The 158-year-old company's chief executive Dick Fuld, known as "the gorilla" for his bloody-minded approach to investment banking, outlined a plan to sell off Lehman's well-respected investment management unit and spin off its commercial real estate assets after it reported an almost $4 billion third-quarter loss.

Fuld, 62, the longest serving CEO on Wall Street, also said the firm would examine all other options — including a sale of the company he joined right out of college. Finding a buyer might pre-empt any hostile takeovers now that Lehman's stock has plunged from $67.73 a year ago to $7.25 Wednesday, giving it a shrunken market capitalization of $7.6 billion.

"If anybody came with an attractive proposition that was compelling for shareholder value, it would be brought to the board, discussed with the board, and evaluated," Fuld said on a conference call. "We remain committed to examining all strategic alternatives to maximize shareholder value."

Lehman tries to soothe Wall Street with asset sale....