Home credit business to go public if Provident takeover goes ahead

The Leeds-based home credit division of Non-Standard Finance (NSF) is to be floated on the London stock exchange as an independent company if the £1.3bn hostile takeover of Provident Financial goes ahead.

NSF has told the Competition and Markets Authority (CMA) it would demerge its Loans at Home business to avoid competition concerns.

The competition watchdog announced this morning it has opened a preliminary investigation into the proposed merger, inviting both sides to comment to gauge whether a deeper investigation would be required.

It said NSF has acknowledged that the merger gives rise to a “realistic prospect” of a substantial lessening of competition in relation to the home credit overlap.

The shares in the demerged Loans at Home would be allocated to the shareholders of NSF, which, post-merger, will include any Provident shareholders that have accepted NSF’s offer as the offer is made on an all-share basis.

“The CMA is inviting comments on whether the proposed demerger would remove the overlap in home credit and remedy the realistic prospect of an SLC that NSF has acknowledged,” a statement said.

“The CMA also invites comments on whether the remainder of the merger (those parts of NSF and Provident not relating to home credit) raises competition concerns such as to give rise to a realistic prospect of an SLC.”

The deadline for comments has been set for June 12, with a decision expected on July 23.

The increasingly bitter dispute over the takeover rumbles on, with M&G Investments yesterday announcing that it will reject a takeover of Provident Financial by the rival sub-prime lender.

The investment firm, which owns 1.7% of Provident’s stock, has joined Schroders and Coltrane in confirming it will refuse to back the deal.

Shareholders of around 20.2% of Provident shares have said they do not intend to accept the bid. However, NSF lowered the level of acceptances it needed to push forward with its takeover plans from 90% to 50%.

“M&G is supportive of Provident’s current strategy and does not believe that a combination with NSF and subsequent break up of the enlarged group will create value for Provident shareholders,” M&G said in a statement yesterday.

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