UPDATE 2-Gleacher says in merger talks; to exit fixed-income business

Wed Apr 10, 2013 10:40am EDT

* Exit from fixed income business could affect 160 employees

* Sold mortgage lending unit to Ocwen Financial in Feb

* Shareholder Clinton Group seeks to nominate new directors

April 10 (Reuters) - Gleacher & Co Inc said it was in talks regarding a possible merger, less than two months after it suspended its search for a buyer, adding to uncertainty that has already cost the investment bank clients and employees.

Gleacher said in February that it had given up its search for a buyer and for fresh capital. It had also rebuffed an offer from Stifel Financial Corp.

Gleacher shares rose as much as 30 percent to $0.88 on the Nasdaq on Wednesday, but pared some of their gains to trade up 7 percent at $0.73. The stock has lost 13 percent of its value since the beginning of the year.

The investment bank has seen more turmoil in the last two years than in the preceding two decades.

Gleacher has replaced its executive team, closed its equities business, sold its mortgage-origination unit and fired more than 100 traders and bankers in the past year, and posted a slew of losses, weakening client confidence in the firm.

In its annual filing with the U.S. Securities and Exchange Commission, Gleacher said a number of its trading customers have reduced or suspended their business with the company and that new investment banking mandates had dwindled.

Gleacher, which now has few businesses left, also said on Wednesday that it is exiting its fixed-income business, affecting 160 employees.

The company, founded by merger and acquisition veteran Eric Gleacher, had 220 employees as of March 15.

Gleacher also said shareholder Clinton Group was looking to nominate a slate of directors, including Chief Executive Thomas Hughes, at an upcoming annual shareholder meeting.

Clinton Group held a 0.22 percent stake in the company at the end of last year, according to Thomson Reuters data.

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