PROVIDENT Financial has bolstered its board and urged shareholders to reject a £1.3bn hostile takeover from rival Non-Standard Finance (NSF) which it describes as financially flawed.
The board of Bradford-based Provident has announced the appointment of Robert East as a non-executive director and chairman of Vanquis Bank, subject to regulatory approvals. Provident has hired Neil Chandler as managing director of Vanquis Bank. He will join the Vanquis Bank board and start as managing director on April 15, subject to regulatory approvals. The board has also announced the appointment of Graham Lindsay as a non-executive director.
In a statement, Provident reiterated its belief that NSF’s nil-premium offer “is not in the best interests of all Provident shareholders”.
The statement added: “It is strategically and financially flawed and presents significant risk in terms of both execution and shareholder value.
“The Provident board is committed to maximising value for all Provident shareholders and will explore all appropriate alternatives to achieve this objective.”
Provident’s board believes that the NSF proposal has “significant flaws” and would have long-lasting, detrimental consequences for Provident’s shareholders and customers.
The statement said: “NSF has not undertaken transactions of this size and complexity and its track record is one of significant value destruction.
“Provident has been delivering on the objectives set out in early 2018 which include, the board believes, substantially resolving material outstanding regulatory issues with the FCA, providing sound foundations for future growth and value creation.”
The statement added: “Provident has a clear strategy to deliver attractive and sustainable shareholder returns and good customer outcomes in an evolving industry and regulatory environment by implementing a number of planned growth and efficiency initiatives across each of the divisions.”
Patrick Snowball, the chairman of Provident, said: “The Provident board believes that NSF’s hostile offer represents an irresponsible approach in the context of a regulated business which is emerging from a period of substantial instability.
“As such, the offer would have a negative and destabilising impact on Provident stakeholders, including its customers, for a considerable period of time.
“The Provident board believes that the offer would be value destructive and that the arguments put forward by NSF do not take into account the significant operational progress made by Provident’s management team.
“Accordingly, the Provident Board unanimously believes the offer is not in the best interests of Provident shareholders or customers and should be firmly rejected.”
Malcolm Le May, the chief executive said: “Having stabilised the group, the management team is in the process of developing and implementing a number of planned growth and efficiency initiatives across each of its divisions.”
In response, John van Kuffeler, NSF’s chief executive, said: “The Provident board has failed to present a credible vision for Provident, demonstrating that the company is still adrift without a coherent strategy or an effective management team.”
He added: “Growth is underwhelming, customers and management are leaving, central costs are rising and numerous regulatory issues still exist across the Provident group.
“We urge shareholders to accept our offer without delay so that we can get on with the job of ending this difficult period for Provident by restoring the business culture, fixing Provident’s self-inflicted problems and unlocking substantial value for shareholders.”