CMA to investigate NSF's £1.3bn bid for Provident Financial

The Competition and Markets Authority said on Tuesday that it will investigate Non-Standard Finance's £1.3bn takeover bid for larger rival Provident Financial.

The competition watchdog said the deadline for a phase 1 decision was yet to be confirmed.

Non-Standard Finance announced last Friday that it was offering 8.88 new NSF shares for each Provident share. Based on NSF's closing share price of 58p a share the day before, this values each Provident share at 511p.

However, Provident rejected the offer on Monday, saying it was "highly opportunistic" and expressing disappointment that NSF had decided not to engage with the board prior to its announcement.

"The board considers that this hostile offer represents an irresponsible approach in the context of a financially regulated business which is recovering from a period of substantial instability," it said in a statement. "The board believes that this offer could have a negative and destabilising impact on its stakeholders, including its customers, for a considerable period of time."

Provident said the terms of the offer do not reflect the underlying value and upside potential of the company's businesses, the value of which should accrue entirely to all Provident Financial shareholders.

The company also went on to highlight its objection to certain aspects of the deal, such as the sale of the Moneybarn and Satsuma units.

It said the disposal of Moneybarn at this point in the economic cycle would not maximise value for shareholders and fails to recognise the strong financial performance of the division and synergistic benefits with Vanquis.

In addition, it argued that the proposed sale or closure of Satsuma would be detrimental and "does not recognise its strategic value in light of the significant investment made in the business, its strong current customer growth as well as the board's continued confidence in its future growth prospects".

At 1050 GMT, Provident shares were up 3% to 628.20p.