THE future of a £40m deal to take over City stockbroker Seymour Pierce suffered a blow last night amid a botched management overhaul at its US buyer.
Gerova Financial Group, a New York-managed reinsurance company, had engineered a reverse takeover of Seymour Pierce that would have seen its chairman Keith Harris become chair of a group worth about £400m.
Seymour Pierce announced in December that Gerova was to buy it and a third business, equities trader Ticonderoga Securities, and merge the two brokers. It would earn Harris an estimated £10m payout from his 25 per cent stake in Seymour Pierce.
But Gerova’s shares plunged by over a third yesterday after its newly-named chairman Dennis Pelino refused to take the job.
Pelino’s decision to walk followed the resignation of former chairman Gary Hirst and four board members last week after Gerova announced a board overhaul. A report in January also raised questions about Gerova’s finances, though the company said the paper was inaccurate.
Gerova shares have slumped from more than $86 (£53.40) last June to just $6.39 yesterday.
Harris last week postponed his new role as chair and the ongoing concerns could mean Seymour Pierce has to abandon the plans. Michael Hlavsa, Gerova’s chief financial officer, is to lead the firm until it recruits a new chairman.