NEW YORK (CNN/Money) - Lehman Brothers has pulled its $5 billion bid for CIT Group Inc., the finance unit of Tyco International Ltd., a source familiar with the auction told CNN/Money.

Two private equity firms, Blackstone Group and Bain Capital, were planning to make a joint offer for CIT, but Lehman swooped in with its own $5 billion offer for CIT, two people familiar with the discussions said.

"They've created a floor for the bidding," one person said.

But Lehman pulled out once news of the deal broke, a different source said.

Both Lehman Brothers and Tyco declined comment.

News of the deal initially caused Tyco (TYC: Research, Estimates) shares to gain nearly 5 percent. But at the close of trading Friday, the stock had dropped 67 cents to $23.70.

Lehman Brothers and Goldman Sachs are co-lead underwriters on CIT's pending initial public offering, a May 13 filing with the Securities and Exchange Commission said.

In April, the CIT Group filed with the SEC for an IPO that could raise as much as $7.15 billion. The offering would trade as "CIT" on the New York Stock Exchange.

The company is pursuing an IPO of the unit and at the same time talking to potential suitors to sell the business. Goldman is also advising on the sale of the business.

Both Bain and Blackstone declined comment.