7th Jul 2015 12:03
LONDON (Alliance News) - S&U PLC Tuesday said it has agreed to sell its Loansathome4u home credit business for GBP82.5 million to Non-Standard Finance PLC, with the lender intending a "significant" return of capital to shareholders as a result.
The sale of Loansathome4u marks a historic moment for S&U, which can trace the home credit division to the credit drapery business founded by Clifford Coombs 77 years ago.
Non-Standard Finance, which has been hunting for acquisitions since listing on the main market of the London Stock Exchange in February, said it will continue to look for business it can buy in the home credit industry.
Chairman Anthony Coombs said the approach from Non-Standard Finance, which was unsolicited, caused the board to reconsider its strategy, with the proceeds to enable S&U to invest GBP34 million in motor finance division Advantage Finance and GBP13 million for the division's early-stage vehicle lending product for small and medium sized enterprises.
"The board believes that there are significant benefits from the sale of Loansathome4u for realising fair value for our shareholders; but also significant opportunities to further accelerate the expansion of Advantage and develop its nascent small business vehicle lending products, as well as other higher growth areas of specialist finance," Coombs said in a statement.
"It is our intention to make a significant return of capital once we have concluded our assessment of reinvestment options and following discussions with the company's shareholders," Coombs added.
Non-Standard Finance Chairman John van Kuffeler, formerly the chief executive and then chairman of Provident Financial PLC, said the acquisition of Loansathome4u marks a "significant first step" for the company.
"It provides us with a well-established platform; a growing business; attractive operating margins and return on assets; and will form a strong base for NSF as we grow organically and acquire new businesses," John van Kuffeler said.
If completed, the deal will be classified as a reverse takeover.
S&U shares were up 7.0% at 2,440 pence on Tuesday afternoon. Non-Standard Finance shares were up 0.1% at 101.63p.
By Samuel Agini; [email protected]; @samuelagini
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