£1.3bn takeover bid ‘extremely disappointing’ and ‘irresponsible’
Provident Financial, the Bradford-based subprime lender, has described a £1.3bn takeover bid lodged by Non-Standard Finance (NSF) on Friday as “extremely disappointing” and an “irresponsible approach.”
NSF announced it was looking to acquire Provident Financial to “create a market leader in the non-standard finance sector.” NSF has also revealed that more than 50% of Provident’s shareholders are supporting the deal.
The company valued each Provident share at 551 pence and the entire share capital at £1.3bn.
In response to the offer, Provident Financial has this morning expressed its disappointment over the unsolicited and “highly opportunistic approach” taken by NSF.
Provident’s board said the “hostile offer represents an irresponsible approach in the context of a financially regulated business which is recovering from a period of substantial instability.”
Patrick Snowball, chairman of Provident Financial 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.”
In January, shares at Provident Financial dropped by nearly 20% in trading – wiping £320m from its market value. The drop came after the firm said it expected its full year results for 2018 to be on the “lower end” of market expectations.
The board also confirmed that the terms of NSF’s offer do not reflect the underlying value and upside potential of the Provident’s businesses, the value of which should accrue entirely to all Provident Financial shareholders.
As a result of the offer, Provident has delayed the announcement of its full-year 2018 results to March 13.
Malcolm Le May, CEO of Provident Financial, added: “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.
“We have a clear vision for a financial services group serving the interests of some of the most vulnerable individuals in our society, with a broad product offering and distribution model aligned with changing consumer behaviours and their increasing use of digital technology. At the same time, we are implementing the most up-to-date regulatory standards, which we anticipate will be seen as a blueprint for the Home-Collected and High-Cost, Short-Term Credit sectors.
“We are focused on executing the clearly defined strategy to restore profitability in CCD, improving growth and profitability in Vanquis, as a well capitalised regulated bank, maintaining the strong performance of Moneybarn and maximising the synergies across the whole group to deliver value for all shareholders.”
