Provident Financial PLC (LON:PFG) has hit back at hostile bidder Non-Standard Finance PLC (LON:NSF), saying it has resolved all its recent regulatory issues as a battle over the firm’s future rages on, although the bidder simply responded by saying: "Nothing has changed".
The FTSE 250-listed subprime lender has suffered a series of probes by the Financial Conduct Authority (FCA) relating to lending practices at both its credit card division, Vanquis Bank, and its car financing arm Moneybarn. But all that is now in the past, according to Provident, which said it had “substantially resolved” all the issues with the FCA.
READ: Provident board lambasts “highly opportunistic” takeover bid from Non-Standard Finance
The firm then turned its guns on bidder NSF, saying the rival company’s takeover proposal had “significant flaws and would have long-lasting detrimental consequences” for shareholders and customers.
Provident cited NSF’s “limited banking and credit card experience” and a “strategically and financially flawed” proposal to sell off Moneybarn among the reasons shareholders shouldn’t back the bid.
Patrick Snowball, Provident’s chairman, said he believed the offer undervalued the firm and contained “misguided assumptions about the Provident business” as well as future plans he considered “fraught with execution risk”.
He went on to say that the management team had “stabilised the business in a very turbulent period” over the last 18 months and now had “a clear strategy” to deliver returns.
“Now is not the time to be distracted from delivering on the potential of the Group for all of our shareholders by an unattractive offer, which reveals a lack of commercial logic and regulatory understanding.”
NSF lambasts 'empty promises and hollow words'
NSF, which was set up by Provident’s former chief executive John van Kuffeler, swooped in with the £1.3bn hostile all-paper bid in February and was backed by several of Provident’s major shareholders, including fund manager Neil Woodford.
The company said it was seeking to take over Provident to remedy “disappointing financial performance, operational shortcomings and ongoing cultural issues” within the firm.
In a response statement this morning, van Kuffeler commented: "Provident's announcement today consists of nothing more than empty promises and hollow words. This is from a team which has repeatedly failed to deliver a turnaround at the company and issued a further profit warning only seven weeks ago.
“By contrast we believe our Offer and our proposed strategy would deliver a significant improvement in shareholder value for Provident Shareholders, which is why we already have such substantial shareholder support."
In afternoon trading on Wednesday, Provident shares were down 0.3% at 598p, while shares in NSF were trading at 60p, down 1.5%. The offer of 8.88 new NSF shares for each Provident Financial share held, values the target stock currently at 532.8p.
-- Adds NSF reaction statement, updates share prices --