Provident Financial rejects 'highly opportunistic' bid from Non-Standard Finance

Doorstep lender Provident Financial has rejected a £1.3bn offer from smaller rival Non-Standard Finance, calling it "highly opportunistic".

On Friday, Non-Standard Finance offered 8.88 new NSF shares for each Provident Financial share. Based on NSF’s closing share price of 58p a share the day before, this values each Provident share at 511p. The transaction would result in Provident shareholders owning around 87.8% of the enlarged NSF Group.

But Provident expressed its disappointment at the unsolicited bid on Monday, highlighting the fact that NSF had decided not to engage with the board prior to the 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. 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.

Chief executive officer Malcolm Le May said: "The management team has made substantial strides in restoring stability, improving the company's regulatory position and enhancing its internal culture with a focus on customer outcomes. This further prolonged period of business and regulatory uncertainty could negatively impact stakeholders, including customers and employees, and is not in the best interests of the company.

"We have a clear vision for a financial services group serving the interests of some of the most vulnerable individuals in our society, with a broad product offering and distribution model aligned with changing consumer behaviours and their increasing use of digital technology. At the same time, we are implementing the most up-to-date regulatory standards, which we anticipate will be seen as a blueprint for the Home-Collected and High-Cost, Short-Term Credit sectors."

Provident said that in light of the current circumstances, its full-year 2018 results will be delayed to 13 March.

In response to Provident's statement, NSF said the company's announcement gave no new information about how it plans to address "the significant financial, operational and cultural challenges" it faces.

Chief executive John van Kuffeler said: "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."

At 1445 GMT, Provident shares were up 2.1% to 602p.