Provident Financial says NSF's hostile bid risks jeopardising turnaround

Doorstep lender Provident Financial said on Monday that the £1.3bn hostile bid from Non-Standard Finance risks jeopardising the company's turnaround after its smaller rival published its offer document over the weekend.

The group, which once again urged shareholders to take no action, said the the nil-premium offer of 8.88 new NSF shares per Provident share is "strategically and financially flawed" and presents significant risk in terms of both execution and shareholder value.

Chief executive officer Malcolm Le May said: "Despite the voluminous offer document, NSF has once again failed to address the key problems with its offer; in particular that the regulatory environment has rightly changed beyond recognition in recent years, that Vanquis Bank is now the main driver of the business and that any attempt to distribute significant capital through the sale of Moneybarn is fraught with risk."

Meanwhile, Provident's chairman, Patrick Snowball, said the information in the offer document does nothing to change the board's view that the offer lacks both commercial logic and regulatory understanding.

"We strongly believe that the turnaround of Provident is well underway - we have a clear strategy that is already delivering tangible results. The NSF offer risks jeopardising Provident's turnaround and presents risks to shareholder value which have not been addressed."

NSF said in its offer document that it its plan would deliver "significantly greater" benefits for both Provident and NSF shareholders than either would be able to deliver on their own.

"The NSF board believes that the transaction would mark the end of what has been a very difficult period for Provident," said NSF's chief executive, and founder, Jon van Kuffeler.

"We believe that by combining Provident with NSF we will create a leading UK non-standard finance provider, with strong positions in credit cards, home credit, branch-based lending and guarantor loans. Whilst Provident has faced significant challenges in the recent past and there is a lot of work to do, I am confident that NSF's experienced team can and will transform Provident for the benefit of all shareholders, employees and customers of the enlarged group."

At 0815 GMT, Provident shares were up 2.4% to 570.74p and NSF shares were up 0.5% to 59.49p.