GMP Capital Inc. and FirstEnergy Capital Corp. have started trimming staff less than two weeks after announcing that the investment dealers are merging their energy franchises in a $98.6-million deal.
GMP let go of three research analysts and three corporate finance professionals at its Calgary office this week and FirstEnergy parted ways with an analyst, a research associate and an investment banking employee, sources at the firms said.
Early this month, the brokerages announced that Toronto-based GMP will buy privately held FirstEnergy for $58.9-million in stock, paid out over four years, and the remainder in the form of an unsecured promissory note. The amalgamated firm will be called GMP FirstEnergy when the deal closes some time this autumn.
GMP winnowed down its research department on Wednesday, parting company with analysts Grant Daunheimer, Aaron Swanson and Graham Smith. Stacey McDonald, who covers small and mid-cap oil and gas companies, remains. The names of departing corporate finance staff were not immediately available.
FirstEnergy, meanwhile, laid off Michael Hearn, a small-cap exploration and production analyst, and Jacky Cheng, an investment banking associate. The dealer's research department currently includes seven analysts, though veteran energy infrastructure specialist Steven Paget recently announced his retirement.
A GMP spokesperson confirmed the staff reductions at the dealer.
"With the creation of GMP FirstEnergy, we have started to look at the new organization and how to best serve our collective energy clients from Calgary. We are focused on integration and we expect the process to conclude in [the third quarter of] 2016, following regulatory approval," the spokesperson wrote in an e-mail.
"In some areas of the business, we've been able to make decisions on the go-forward team reasonably quickly, which resulted in six people leaving the organization today. It is always difficult to see good people go and we are grateful for their collective contribution to GMP."
The day after the firms announced the deal, top executives from both firms said they had yet to estimate how many jobs would be cut due to redundancy, but they played down any notion that the number would be large. At the time, the more diversified GMP had 290 employees and FirstEnergy about 100.
Several senior FirstEnergy executives will assume leadership roles in the new operation, including executive chairman Jim Davidson, who will become deputy chairman at GMP's securities arm, and chief executive officer John Chambers, who will serve as vice-chairman and president of GMP FirstEnergy. Nicholas Johnson, managing director of corporate finance at FirstEnergy, will be co-head of energy investment banking and Trent Boehm will be head of energy capital markets.
The deal spells big changes to the capital markets landscape in oil and gas, which has been through two years of turmoil as energy prices slumped and the deal flow, including the resulting fees, slowed. GMP, once a dominant force in energy deal-making, had seen its position in underwriting syndicates and big mergers drop off.
Both shops had undergone staff cuts in recent years. In January, GMP slashed nearly a quarter of its global work force, closing operations in Britain and Australia.
Since GMP announced the takeover, its shares are down about 7 per cent.