Gleacher Ends Search for a Buyer; Shares Slump
Feb 15 Shares of Gleacher & Co Inc lost more than a quarter of their value after the investment bank ended its search for a potential capital infusion or a buyer and agreed to sell its mortgage lending unit ClearPoint to Ocwen Financial Corp.
Gleacher, which did not disclose ClearPoint's sale price, said it expects the deal to close in the first quarter.
The company, founded by merger and acquisition veteran Eric Gleacher, said last year it was exploring strategic alternatives, including raising more capital or a sale.
"Although we did not believe any proposal we received during the process adequately reflected Gleacher's value, we will, as before, be opportunistic in considering value-building strategic initiatives," Chief Executive Thomas Hughes said in a statement.
Eric Gleacher, who founded the company in 1990, stepped down as its chairman last month. He created the mergers and acquisitions department at Lehman Brothers in 1978 and ran global M&A at Morgan Stanley from 1985 to 1990.
During his time at Morgan Stanley, he advised private equity giant Kohlberg Kravis Roberts in its famous takeover battle for RJR Nabisco and featured in the bestselling book on the deal, "Barbarians at the Gate".
The company said the board renewed its stock repurchase program, authorizing up to $10 million in buybacks.
Gleacher also posted a loss from continuing operations of $11.5 million, or 10 cents a share, in the fourth quarter, compared with a profit of $1.8 million, or 1 cent a share, a year ago.
Net revenue for the quarter ended Dec. 31 rose 18 percent to $50.9 million.
The company paid out nearly 82 percent of its revenue in compensation and benefits, far higher that the 60 percent it paid out last year.
Shares of the company, which traded at $10 per share before the financial crisis, fell as much as 29 percent to 67 cents in early trading on the New York Stock Exchange on Friday.
Copyright 2010 by Reuters. All rights reserved.
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