Provident rejects "irresponsible" takeover bid

Provident's chief executive Malcolm Le May
Provident's chief executive Malcolm Le May
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Credit lender Provident Financial has rejected a £1.3bn takeover approach from rival Non-Standard Finance (NSF), describing it as highly opportunistic and irresponsible.

Bradford-based Provident said the approach could have a negative and destabilising impact on its stakeholders, including its customers, as it advised shareholders to take no action.

The firm said the offer does not reflect the underlying value of the company and its prospects.

Provident's chief executive Malcolm Le May told the Yorkshire Post: "In hostile takeovers, the first salvo is fired by the aggressor. You'll see a different picture emerging.

"I will be raising hell on earth to get a better deal for shareholders. I don't think this is a sensible plan and I'm not sure they can implement the plan."

Last week sub-prime lender NSF tabled an all-share takeover bid for Provident at 511p per share.

NSF chief executive John van Kuffeler, who is spearheading the deal, was previously chief executive and chairman of Provident.

Provident has now launched its own salvo, casting doubt on NSF's track record.

"If you look at their share price since flotation, it's not particularly impressive. Their share price has shrunk, which is a reflection of management. It's also a reflection of the increasingly difficult regulatory environment," said Mr Le May.

He added that the bid situation will distract employees.

"Our employees in Bradford are working for a great business. These transactions are incredibly distracting," he said.

"I really feel for our employees. They've done a fantastic job. We are just turning the corner."

Provident said it will do everything it can to maximise value for all shareholders over the coming weeks and will explore all appropriate alternatives to achieve that objective.

"I'm working on it," said Mr Le May.

"I will explore every avenue to find a better deal."

Provident's objections to the deal include opposing the sale or disposing of its Moneybarn and Satsuma units.

According to the terms of the NSF offer, which is backed by more than 50.1 per cent of Provident investors, Provident shareholders will own 87.8 per cent of the new entity.

Investors must vote on whether to approve the deal, but it has already received the blessing of star fund manager Neil Woodford, Invesco and Marathon.

Asked whether these investors could change their minds, Mr Le May said: "All things are possible. I will endeavour to persuade them to reconsider."

NSF responded that Provident's declaration provides no new information, adding it is in talks with the Financial Conduct Authority, Prudential Regulation Authority and the Competition & Markets Authority regarding the deal.

Patrick Snowball, chairman of Provident, said: "Provident Financial's management team has stabilised the business in a very turbulent period over the past 18 months, which has largely consisted of addressing managerial mistakes of the past, and now has a clear strategy for delivering enhanced returns to shareholders."

Provident added on Monday that it is trading in line with expectations but, given the circumstances, the board will delay the announcement of its full-year 2018 results to March 13.

Mr van Kuffeler retorted: "Provident's decision today to delay the announcement of their full year results speaks louder than anything we could say about them, as does their failure to mention any plan for restoring shareholder value."

Provident saw its shares tumble in January after it warned that profits will be at the lower end of expectations.

The group said it had seen a rise in bad debts at its Vanquis Bank arm and falling numbers of new accounts after clamping down on its lending.