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Some 10,000 Lehman Brothers employees in investment banking and capital markets businesses got a reprieve when Barclays agreed to buy the insolvent parent company's core assets within North America.

UK-based Barclays said Wednesday it agreed to acquire Lehman's North American investment banking and fixed income and equities sales, trading and research operations, along with Lehman's New York headquarters building and two New Jersey data centers. According to Lehman, the definitive agreement covers "substantially all of the North American businesses and operating assets of Lehman Brothers Inc.," a wholly-owned subsidiary of Lehman Brothers Holdings Inc. The transaction requires approval from the U.S. Bankruptcy Court.

Barclays also said it intends to "immediately commence discussions with the relevant international regulatory authorities to acquire Lehman Brothers' similar operations outside North America, although there can be no assurances such international operations will be acquired."

Extends North American Growth Strategy

Barclays has been expanding its U.S. presence for years, and maintained that strategy even after the sub-prime crisis that erupted a year ago prompted most other banks to pull back. Along with Bank of America, it was reportedly one of the last remaining suitors negotiating to buy all of Lehman Brothers last weekend. Those talks failed when the U.S. government refused to guarantee any Lehman assets, setting the stage for Lehman to file for Chapter 11 bankruptcy protection early Monday.

The proposed acquisition "accelerates the execution of our strategy of diversification by geography and business … in particular increasing the percentage of Barclays earnings sourced in North America," said Barclays Group Chief Executive John Varley. The acquired businesses will be merged into Barclays Capital, part of Barclays Investment Banking and Investment Management, which is headed by Robert Diamond.

Barclays called the Lehman businesses "a highly complementary fit," and said the combined investment banking business will rank within the top three in the U.S. capital markets. "Barclays believes the Lehman Brothers businesses have an excellent team of people whose skills, capabilities and culture provide a good fit with Barclays and its clients. Barclays looks forward to welcoming them to our team and working together to deliver the combination’s full potential," the statement said.

Lehman Chief Executive Richard Fuld called the deal "a wonderful outcome for a great number of our employees that will preserve and strengthen our terrific franchise."

Lehman said its U.S. registered broker-dealers will continue normal operations. It also said it remains engaged in "advanced discussions" to sell its investment management division to a third party in an unrelated transaction.