Gleacher says in merger talks; exits fixed-income business

Wed Apr 10, 2013 1:56pm EDT

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(Reuters) - Gleacher & Co Inc (GLCH.O) 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.

Bloomberg News reported that Sterne Agee Group Inc was in talks to buy Gleacher, citing people familiar with the matter. (link.reuters.com/xuj37t)

Sterne Agee did not return calls seeking comment, while a Gleacher spokesman declined to comment.

Gleacher said in February that it had given up its search for a buyer. It also rebuffed an offer from Stifel Financial Corp (SF.N).

Shares of Gleacher rose as much as 30 percent to 88 cents on the Nasdaq on Wednesday, but pared some of their gains to trade up 4 percent at 71 cents. The stock has lost 13 percent of its value since the beginning of the year.

Gleacher might be worth around 60 to 83 cents per share, or $79 million to $93 million, according to Joel Jeffrey, an analyst with Keefe, Bruyette & Woods Inc.

The day before the company said it suspended its search for a buyer, its shares closed at 94 cents a share. Gleacher had said it was unable to secure an adequate price.

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 latest 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 was 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.

"It was surprising to see the company exit its fixed income business because it is such a dominant part of the company's revenue. Apart from that, there isn't much left of the company," said Jeffrey.

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.

Gleacher's largest shareholder MatlinPatterson has also submitted a slate of directors for election to Gleacher's board.

(Reporting by Tanya Agrawal and Jochelle Mendonca in Bangalore; Editing by Roshni Menon and Joyjeet Das)

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