Provident chairman Snowball weighs in on 'dreadful' NSF bid
Provident Financial's chairman on Tuesday urged shareholders not to accept a hostile takeover bid from fellow sub-prime lender Non-Standard Financial.
Chairman Patrick Snowball said he was taking the "unusual step" of sharing his personal views on the matter.
In a letter to shareholders last week, NSF admitted that certain of their dividends since 2015 had been in contravention of the Companies Act, with NSF allegedly citing "technical infringements" but Snowball branding the dividends simply as "unlawful".
Snowball said this called into question the ability of NSF to run Provident, a business seven times larger than their own and that includes a regulated bank.
"At this point, there is no new revelation about this deal; it is still the same dreadful deal that it was on day one. It is 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.
"These shareholders already together own about 54% 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%," he said.
He also warned that any deal could inflict a cost to shareholders of as much as £40m in transaction fees alone, before "the other significant potential value-destroying elements of the deal" had even been taken into account.
The chairman finished by strongly recommending that shareholders back Provident's board and reject the takeover bid, which he denounced as a "destabilising, hostile transaction which suffers from major strategic and financial flaws".
Provident Financial's shares were up 0.86% at 520.44p at 0839 BST.