Provident to be taken over by Non-Standard Finance in all-share deal
NSF boss John van Kuffeler was previously chief executive and chairman of Provident.
Sub-prime lender Non-Standard Finance has tabled a £1.3 billion all-share takeover bid for its troubled rival Provident.
NSF boss John van Kuffeler, who is spearheading the deal, was previously chief executive and chairman of Provident, a doorstep lender.
Under the terms of the deal, Provident shareholders will be entitled to receive 8.88 new NSF shares for each Provident share. Based on NSF’s closing share price of 58p on Thursday, the tie-up values Provident at £1.3 billion, or 511p per share.
This transaction will create a market leader in the non-standard finance sector with a strong position in all four main segments John van Kuffeler, NSF boss
Mr van Kuffeler said: “This transaction will create a market leader in the non-standard finance sector with a strong position in all four main segments.
“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. That approach was rebuffed and since then Provident has further lost its way.
“However, NSF 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.”
The deal, which is backed by more than 50% of Provident investors, will see Provident shareholders own approximately 87.8% 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.
Russ Mould, investment director at AJ Bell, said that the deal looks “ballsy”.
He added: “This deal looks ballsy and Non-Standard Finance could be punching above its weight. It seems like an opportunistic move to kick out the Provident management team and for van Kuffeler to regain control of his former empire.”
Shares in Provident were up more than 4% at 533p in morning trade.
Provident said in a stock market update: “The board of Provident Financial notes the unsolicited offer for Provident Financial announced this morning by Non-Standard Finance.
“The board’s considered response to the offer will be announced in due course. In the meantime, shareholders are strongly advised to take no action in respect of the NSF offer.”
Only in January, embattled Provident saw shares tumble after it warned 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.
The company, which sells high-cost credit through its Vanquis Bank, Moneybarn and consumer credit business, said it saw a 71,000 fall in new accounts at Vanquis, down to 366,000 in 2018.
Provident is also recovering from a string of regulatory sanctions.
The Financial Conduct Authority (FCA) fined credit card lender Vanquis £2 million and ordered it to pay £168.8 million in compensation for failing to disclose charges of its popular repayment option plan.
Meanwhile, its Moneybarn car loan arm is under investigation by the FCA over how it treats borrowers who fall behind with payments.
The company has seen shares decimated after two profit warnings in 2017, which prompted the resignation of former chief executive Peter Crook.