Provident rejects ‘opportunistic’ £1.3bn NSF bid

Bradford-based subprime lender Provident Financial on Monday rejected an unsolicited £1.3 billion all-share offer from smaller rival Non-Standard Finance plc (NSF) as “irresponsible” and “highly opportunistic.”

NSF is run by former Provident Financial CEO John van Kuffeler.

The offer values each Provident Financial share at 511p, but the firm’s shares have risen to around 610p following the news of the bid.

Provident Financial said it is committed to maximising value for all Provident Financial shareholders “and will explore all appropriate alternatives to achieve that objective.”

The company advised Provident Financial shareholders to take no action in respect of the offer.

It also said it will delay the announcement of its full-year 2018 results to March 13, 2019.

Provident Financial chairman Patrick Snowball said: “It is extremely disappointing that NSF has chosen to announce an unsolicited and highly opportunistic offer for Provident Financial.

“Provident Financial’s management team has stabilised the business in a very turbulent period over the past 18 months, which has largely consisted of addressing managerial mistakes of the past, and now has a clear strategy for delivering enhanced returns to shareholders.

“The board of Provident Financial believes that the offer does not reflect the underlying value of the company and its prospects.

“It also has a number of concerns with regard to the offer, including its all-share nature and the executability of the strategy set out in the offer.

“The board therefore intends to do everything it can to maximise value for all shareholders over the coming weeks and will explore all appropriate alternatives to achieve that objective.”

Provident Financial said in a statement: “… the board of Provident Financial expresses its disappointment at the unsolicited and highly opportunistic approach taken by NSF, including its decision not to engage with the board prior to the announcement …

“The board considers that this hostile offer represents an irresponsible approach in the context of a financially regulated business which is recovering from a period of substantial instability.

“The board believes that this offer could have a negative and destabilising impact on its stakeholders, including its customers, for a considerable period of time. 

“The board, having considered the offer with its financial and legal advisers, believes that the terms of the offer do not reflect the underlying value and upside potential of the company’s businesses, the value of which should accrue entirely to all Provident Financial shareholders.

“The board also notes that NSF is seeking to obtain control of Provident Financial through a share exchange without offering any strategic premium for a business which is a market leader in its sector.”

Of NSF’s proposal, Provident Financial added: “The board does not believe that disposing of Moneybarn at this point in the economic cycle would maximise value for shareholders …

“The proposed sale or closure of Satsuma would be detrimental and does not recognise its strategic value in light of the significant investment made in the business, its strong current customer growth as well as the board’s continued confidence in its future growth prospects given its optimal positioning for the growing demand for the digital delivery of financial services …

“The board believes that the proposed demerger of NSF’s Loans at Home business would result in a subscale listed company highly unlikely to maximise value in a public markets context …

“The board is committed, however, to maximising value for all Provident Financial shareholders and will explore all appropriate alternatives to achieve that objective.

“The board continues to strongly advise Provident Financial shareholders to take no action in respect of the offer.

“Trading in the business for 2018 was as outlined in the trading update on 15 January 2019.

“Current trading continues in line with our expectations.

“However, in light of the current circumstances the Board believes it is appropriate to delay the announcement of its full-year 2018 results to 13 March 2019.”

Provident Financial CEO said Malcolm Le May said: “The management team has made substantial strides in restoring stability, improving the company’s regulatory position and enhancing its internal culture with a focus on customer outcomes.

“This further prolonged period of business and regulatory uncertainty could negatively impact stakeholders, including customers and employees, and is not in the best interests of the company …”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.