22nd Feb 2019 10:47
LONDON (Alliance News) - Provident Financial PLC on Friday advised its shareholders to take no action, following an offer from smaller peer Non-Standard Finance PLC.
Provident, in a short statement, said it will announce a "considered response" to the offer in due course.
Non-Standard Finance earlier Friday said it has made an all-share offer worth GBP1.3 billion to acquire bigger rival home credit provider Provident.
Non-Standard Finance, which provides home credit under the brands Loans at Home and Everyday Loans, will pay for each Provident Financial share with 8.88 new Non-Standard Finance shares.
Based on Non-Standard Finance's Thursday closing share price of 58 pence, the offer values each Provident Financial share at 511p.
Provident's shares were 4.4% higher on Friday morning at 534.00p, while Non-Standard Finance's were 7.6% higher at 62.00p.
Provident shareholders will own around 88% of the enlarged Non-Standard Finance group following the combination, Non-Standard Finance said.
"We have recognised the strong logic and value creation potential of a combination with Provident for some time and hence approached the Provident board with a proposal in January last year," Non-Standard Finance Founder & Chief Executive John van Kuffeler said earlier Friday.
"That approach was rebuffed and since then Provident has further lost its way. However, Non-Standard Finance has extensive management expertise and experience, and the correct strategy to turn Provident around and release significant value by combining it with our own fast-growing businesses for the benefit of customers, employees and investors," he added.
"I'm delighted holders of over 50% of Provident's shares have given their support to our proposal today."
Shareholders Woodford Investment Management UK, Invesco Ltd, and Marathon Asset Management LLP UK, worth over 50% of Provident, have said they will accept the deal.
Non-Standard Finance said the merger would revitalise Provident's prospects, unlock substantial value for shareholders of both companies, and return Provident's culture to one focused on positive customer outcomes, working closely with regulators.
The combination is also envisaged to result in cost savings, revenue synergies, and lower funding costs as well as the potential for capital returns over time from disposals and capital efficiency.
Non-Standard Finance intends to complete a demerger of its home credit business, Loans at Home, to assuage the Competition & Markets Authority.
Non-Standard Finance expects to list its Loans at Home business either on London's Main Market or on the junior AIM market.
The company also said following the merger it would sell Provident's Moneybarn vehicle finance business and either sell or close the Satsuma unsecured loan business as both the units are non-core to the future strategy of the new Non-Standard Finance group.
Related Shares:
PFG.LNSF.L