Reject ‘dreadful’ takeover bid, urges Provident

In a strongly worded letter, Provident’s chairman Patrick Snowball accused NSF of paying unlawful dividends and described the takeover bid as “more of a coup d’état than a hostile takeover, spearheaded by a management team at NSF with a track record of value destructive acquisitions and facilitated by two powerful shareholders”.

Mr Snowball told investors: “These unlawful distributions are a telling indictment of the competency of the NSF team and the weak oversight of their board and must call into question their ability to run a business some seven times larger than their own and one which includes a regulated bank.”

Bradford-based Provident has urged shareholders to take no action in respect of NSF’s offer.

Mr Snowball said that while many of Provident’s questions remain substantially unanswered, NSF finally acknowledged one of its questions last Friday and confirmed that certain dividends since 2015 have been in contravention of the Companies Act.

“They were described by NSF as ‘technical infringements’, but the simple fact and truth of the matter is that they were unlawful,” said Mr Snowball.

“While NSF may now have accepted these failures under the Companies Act, through either indifference or arrogance or because they do not have the answers, they have failed to provide a comprehensive response to our other critical questions.

“I find this silence telling, particularly when it relates to straightforward questions regarding the future management of Vanquis Bank (which would be the largest business within the enlarged group), the implications of selling Moneybarn on the broader Provident Group or the genuine challenges of addressing the concerns for the CMA.”

NSF has acceptances for over 50 per cent of Provident’s shares, including from Woodford Investment Management, Invesco Asset Management and Marathon Asset Management.

Provident, which owns Vanquis Bank and Moneybarn, has said it is continuing to explore all appropriate alternatives to maximise value for shareholders.

The CMA is currently investigating the deal and the FCA has also raised concerns.

Mr Snowball told shareholders: “NSF’s failure to make progress with their CMA submission creates further disruption for the business and yet more uncertainty for our shareholders.”

Talking about the major investors who have backed the deal, he said: “These shareholders already together own about 54 per cent of NSF, a business which has singularly failed to deliver pre-tax profits since the IPO and in which period its share price is down 48 per cent.

“This coup d’état may inflict a cost to shareholders of as much as £40m in transaction fees alone, and that’s before you take into account the other significant potential value-destroying elements of the deal.”

Mr Snowball pointed out that he has only been chairman of Provident for six months and the majority of the board have served for less than a year.

He said the new management team has already made good progress with the turnaround of the business, seeking to address the poor delivery of the business in prior years which had led to regulatory and financial issues.

“We fully acknowledge those issues and this poor historical performance and our responsibility to deliver value and returns for you, our shareholders, but a flawed and risky transaction is the wrong way to proceed,” he told investors.

“I am confident that we have the right strategy and team in place to fulfil the value potential of Provident for our shareholders.”