SIPP provider Hornbuckle Mitchell has denied it is in rocky negotiations with LV= about a possible takeover deal.
In August, Hornbuckle denied it has entered negotiations with LV= exclusively, maintaining it is looking for investment in the company and is talking to a number of potential partners.
Sources claim LV= has come across a large potential liability within Hornbuckle which has scuppered the current takeover offer.
According to the source, there is still the possibility of another takeover deal, but one in which LV= would pay far less for Hornbuckle, and pay out in stages over three to four years.
This, the source said, would limit the damage to LV= if Hornbuckle's liability significantly decreases its value over time.
However, Mary Stewart, sales and marketing director at Hornbuckle, said no liability has been discovered and there is no staged buyout deal on offer from any party.
"Hornbuckle remains in discussions with a number of parties with a view to securing external investment," said Stewart.
"The primary objective is to provide additional funds to drive our future growth strategy and also to enable several long-standing shareholders, who are not involved at an operational level, to exit the business.
"We have had positive discussions with potential trade and private equity investors. No agreement has yet been reached."
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