The board of doorstep lender Provident Financial PLC (LON:PFG) have lambasted a “highly opportunistic” bid for the firm launched last Friday by Non-Standard Finance PLC (LON:NSF), a company set up by its former chief executive John van Kuffeler.
In a statement on Monday morning, Provident criticised the “hostile” offer, which values the FTSE 250 firm at £1.3bn, as an “irresponsible” move that did not reflect the underlying value of the company’s businesses and could have “a negative and destabilising impact” on its shareholders.
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The board was also keen to point out that the all-share offer, through which each Provident share would be worth 8.88 new NSF shares, did not offer “any strategic premium”.
Shareholder-backed coup
The company was thrown into the lurch last week by the bid, which is backed by three of its major shareholders, Woodford Investment Management, Invesco, and Marathon Asset Management, who collectively control over 50% of its shares.
Perhaps not so coincidentally, the same three investors also control the majority of shares in NSF, leading some analysts to conclude that the move is an effort to manoeuvre around PFG’s board after it was revealed takeover discussions between the two firms had broken down last year.
The company’s fortunes have not been helped by a series of fiascos in the last 12 months, which included a £172.1mln fine relating to its credit card unit Vanquis Bank as well as a steeply discounted £300mln rights issue that was required to stabilise its finances after swinging to a £123mln loss in 2017 from a £343.9mln profit the year before.
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In its statement, Provident acknowledged the backing of the offer by its major shareholders, but reiterated its advice for shareholders to take no action and said it was committed to “maximising value for all Provident Financial shareholders and will explore all appropriate alternatives to achieve that objective”.
Patrick Snowball, chairman of Provident, said that the company’s management team had “stabilised the business in a very turbulent period over the past 18 months” and that the “unsolicited and highly opportunistic offer” from NSF was “extremely disappointing”.
Malcolm Le May, chief executive, added that the management team had made “substantial strides in restoring stability, improving the company's regulatory position and enhancing its internal culture with a focus on customer outcomes”.
In early trading Monday, Provident shares were down 1.6% at 580p, while NSF shares were down 1.9% at 65.8p.