25th Feb 2019 08:41
LONDON (Alliance News) - Provident Financial PLC said Monday it is "disappointed" at the "unsolicited and highly opportunistic" takeover offer from smaller peer Non-Standard Finance PLC.
NSF made an all-share offer worth GBP1.3 billion for Provident Financial on Friday.
Provident said it considers the "hostile" offer an "irresponsible approach" considering Provident is recovering from a period of "substantial instability".
The company was pushed into a loss in 2017 after it agreed a settlement with the Financial Conduct Authority over wrongdoing in its credit card and motor finance businesses.
Provident said NSF's offer could have a "negative and destabilising" impact on its business for a "considerable period of time".
Having considered the offer over the weekend, Provident said the terms "do not reflect" the underlying value of the company and the "upside potential" of its businesses.
"The management team has made substantial strides in restoring stability, improving the company's regulatory position and enhancing its internal culture with a focus on customer outcomes. This further prolonged period of business and regulatory uncertainty could negatively impact stakeholders, including customers and employees, and is not in the best interests of the company," said Chief Executive Malcolm Le May.
Provident continues to "strongly" advise shareholders take no action but has acknowledged the "indications provided" in favour of the deal by its largest shareholders, Woodford Investment Management UK, Invesco Ltd, and Marathon Asset Management LLP UK. Combined they hold over 50% of Provident.
Provident also questioned NSF's "track record" and its "ability to execute" the proposed strategy and manage a business the size of Provident. Specifically, Provident points out the "limited" regulatory and operational experience in the NSF executive management team in managing a bank.
Which Provident believes is "critical" given Vanquis Bank is Provident's largest asset.
Provident also noted NSF's share price since the company listed in 2015. NSF shares have shed 42% since IPO and have underperformed the FTSE All-Share Index by 48% over the same period - which Provident believes is a "highly relevant factor" considering NSF's all-share offer.
Provident said its current trading continues to be in line with management expectations but will delay the announcement of its full year results to March 13.
Shares in Provident Financial were down 2.9% early Monday at 572.48 pence each. NSF was trading down 0.9% at 66.50p.
Related Shares:
PFG.LNSF.L