Credit lender Provident Financial said its unwanted suitor Non-Standard Finance (NSF) has a track record of "value destruction" and its £1.3bn offer is not in the best interests of Provident’s shareholders and should be firmly rejected.
Bradford-based Provident said it has a clear plan to maximise value for shareholders with a strategy to deliver growth and attractive returns, warning that NSF's offer presents "significant operational and execution risks".
Provident said that as well as undervaluing the group and its prospects, the offer is risky due to the changing regulatory environment and NSF’s limited experience of the full breadth of Provident's businesses.
"In addition, the offer has major strategic flaws and appears to be based upon a misguided view that the regulatory approach to Provident would be different if the group was owned by NSF," Provident said.
The group said it will explore all appropriate alternatives to maximise value for shareholders.
Provident's chairman Patrick Snowball said: "The board believes strongly that the offer made by NSF is not in the interests of all shareholders.
"Its offer undervalues Provident, has major strategic flaws, contains a number of misguided assumptions about the Provident business and includes future plans which we consider to be fraught with execution risk and which, as NSF themselves state, are subject to a post-completion review."
He said the existing management team has stabilised the business in a very turbulent period over the past 18 months, which has required addressing managerial mistakes of the past.
"It now has a clear strategy for delivering attractive returns to shareholders," he added.
"Now is not the time to be distracted from delivering on the potential of the group for all of our shareholders by an unattractive offer, which reveals a lack of commercial logic and regulatory understanding and would have significant execution risk.”
NSF's takeover offer is being spearheaded by its chief executive John van Kuffeler, who was previously chief executive and chairman of Provident.
In a robust defence, Provident said it has substantially resolved all material, outstanding regulatory issues with the FCA and has completed the search for a new managing director and a new chairman for its banking arm Vanquis.
Malcolm Le May, chief executive of Provident, said: “Today’s announcement illustrates how we have put the company’s legacy issues behind us and strengthened our relationship with our customers, regulators and other stakeholders.
"This, together with the considerable momentum we have in Provident's outstanding portfolio of complementary businesses, gives us confidence that our shareholders can expect continued focus on improving our performance and returns."
The group will announce annual results on March 13.
Provident concluded NSF’s unsolicited offer would have long-lasting detrimental consequences for the group’s shareholders and customers.
It added that NSF's proposed sale of Moneybarn is "strategically and financially flawed" and that selling it at this point in the economic cycle is not value maximising for shareholders.
Mr van Kuffeler said: "Provident's announcement today consists of nothing more than empty promises and hollow words.
"This is from a team which has repeatedly failed to deliver a turnaround at the company and issued a further profit warning only seven weeks ago.
"By contrast we believe our offer and our proposed strategy would deliver a significant improvement in shareholder value for Provident shareholders, which is why we already have such substantial shareholder support."