Blue Oar, which also incorporates Blue Oar Asset Management, Australian investment boutique Inteq, wealth management business Rowan Dartington, and international trading division Astaire, said Evolve had indicated that Blue Oar shares would be acceptable, at least in part, for an MBO of Blue Oar Securities.

Evolve had a hostile offer for the Blue Oar group declared unconditional on Monday, after more than 50 percent of shareholders approved the deal.

Blue Oar said Wednesday the board continued to believe the Evolve offer undervalues Blue Oar and does not intend to recommend it, or accept the offer in respect of their own shareholdings.

Blue Oar directors Andrew Monk, Mark Brumby and Peter Joy are retaining their shares in anticipation of a management-led buyout of Blue Oar Securities.

Blue Oar chairman Gavin Casey, a former chief executive of the London Stock Exchange, has resigned with immediate effect and said he is planning not to accept the offer and to, instead, sell his shares in the market.

Blue Oar said it had been informed that Evolve wishes to make several appointments to the Blue Oar board.

Evolve Capital responded by saying it looked forward to the current Blue Oar board effecting the requested changes to the board composition "at the earliest possible opportunity."

It said any negotiations concerning a management buyout of Blue Oar Securities would be conducted by the reconstructed Blue Oar board.

Evolve confirmed it would welcome an offer for Blue Oar Securities if it were on "acceptable terms" and fully supported by the relevant employees.

At 10:40 a.m., shares in Blue Oar were trading at 9 pence, down 5 percent. Shares in Evolve were down 6 percent at 8.5 pence.

(Reporting by Matt Scuffham; Editing by Hans Peters)

LONDON (Reuters)