Non-Standard Finance PLC (LON:NSF) is to attempt to force through its hostile takeover of bigger rival Provident Financial PLC (LON:PFG) despite only securing a slim majority from the Provvie’s shareholders.
NSF, which is run by Provident’s former boss John Van Kuffeler, said in a statement after the close on Wednesday that it had received unconditional acceptances for its bid representing 53.53% of the FTSE 250 subprime lender’s share capital, which while a majority was much lower than the 90% threshold needed to force out minority stakeholders and take complete control.
However, other major investors, including Schroders which owns a 14.6% stake in the Provvie, has refused to back the deal.
After its plans to secure 90% were scuppered by Schroders, NSF in its announcement on Wednesday lowered its acceptance condition to 50% plus one share.
Kuffeler praised the acceptances as a “major milestone” in the company’s battle to take over Provident, which has been raging since February, adding that the offer remained open to other shareholders who had not yet accepted the all-share deal, which values the Provvie at around £1.3bn.
Provident was quick to respond, pointing out that 92% of shares held by independent shareholders had not agreed to the offer and that in the 12 weeks since launching its takeover effort NSF had only increased the number of acceptances by 4%.
The hostile bid will now have to pass through scrutiny from three UK regulators, the Financial Conduct Authority (FCA), the Prudential Regulation Authority and the Competition and Markets Authority (CMA).
NSF has already been facing scrutiny from the FCA over its approach, with the regulator having warned the company in March that its takeover plan could fall foul of competition rules if it led to an increase in unaffordable lending.
In early-afternoon trading on Thursday, NSF shares were up 2.3% at 49.1p, while Provident shares were down 1.7% at 442.5p.