Lazard Deal Talks With Brigade Collapse Over Conflict Concerns

(Bloomberg) -- Investment bank Lazard Ltd.’s talks to acquire Brigade Capital Management LP fell apart over a disagreement on how to limit the money manager’s involvement in contentious distressed-debt negotiations.

Senior executives at the $30 billion investment firm were informed Thursday that deal discussions are dead, according to people with knowledge of the matter. Brigade was closing in on a deal with Lazard’s asset-management arm, Bloomberg News reported last week. One of the final sticking points involved limitations that Lazard sought to place on Brigade’s future activities that could be in conflict with its lucrative restructuring-advisory business, the people said, asking not to be identified discussing private information.

“We would not entertain any transaction that would seek to implement constraints on our investment process due to perceived conflicts or otherwise,” Don Morgan, Brigade’s chief investment officer and managing partner, said in a statement to Bloomberg. “Earlier today I informed our partners and employees that Brigade Capital Management LP has decided to remain an independent partnership.”

A spokesman for Brigade declined to provide details beyond Morgan’s statement. A representative for Lazard didn’t immediately respond to requests for comment.

The discussions took place amid a pickup in deal activity in the space. T. Rowe Price Group Inc. recently unveiled a $4.2 billion deal to buy Oak Hill Advisors, embracing a credit-focused firm in a rare acquisition beyond its core mutual fund business. Franklin Resources Inc. also announced it would buy Lexington Partners, a private equity fund manager, for $1.75 billion, a move that will result in it overseeing $200 billion in alternative assets.

Brigade has found itself in prominent distressed-debt situations, leading negotiations for control of companies on the brink of or in bankruptcy, including Guitar Center Inc. and IHeartMedia Inc.

That’s led to thorny brawls in credit markets. As a lender to Ronald Perelman’s makeup giant Revlon Inc., the firm joined a group in opposition to the company’s efforts to rework its debt. It then found itself with a $175 million-dollar mistaken payment sent by Revlon’s bank, Citigroup Inc., which Brigade refused to return. Citigroup sued Brigade in an attempt to recoup its money, but has been blocked from reclaiming its cash.

Lazard advises clients across the globe on mergers, capital-raising and restructurings. It led luxury retailer Neiman Marcus Group Inc. and Eddie Lampert’s Sears Holdings Corp. through bankruptcy as lead investment bank.

©2021 Bloomberg L.P.