The takeover bid for Bradford-based Provident Financial that was a mess from day one
The biggest PLC story in Yorkshire over the past few months has been the bitter, £1.3bn hostile takeover bid for Provident Financial by rival Non-Standard Finance (NSF), which ultimately failed.
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NSF called off the offer after failing to gain enough backing for the bid. It said that due to the lack of support for the deal, the merged group would not have sufficient regulatory capital. Bradford-based Provident responded by saying that the withdrawal of the bid was “in the best interests” of its shareholders.
It added that it “greatly regrets the unnecessary distraction, cost and impact of the uncertainty on Provident’s customers and staff caused by NSF pursuing its extended hostile offer”.
The move followed mounting opposition from Provident shareholders to the bid. Several prominent shareholders, including Schroders, Coltrane, Janus Henderson and M&G, opposed the takeover, which took the total declared opposition to 21.6 per cent.
Despite some entertaining insults from both sides, this takeover bid was a mess from the day it started. A bunch of disgruntled shareholders in both Bradford-based Provident and NSF decided to try to merge their two investments and backed the NSF bid.
NSF tabled the bid with backing from 50 per cent of investors, but said it wanted to get 90 per cent of shareholders to support the offer.
NSF had secured the backing of some of its major shareholders including Neil Woodford, Invesco and Marathon, which together hold a 49 per cent stake in Provident. The bid’s failure brought to an end an increasingly acrimonious takeover saga, with the pair engaging in a war of words since the bid was first tabled on February 22.
This saga rolled on for more than three months and each new announcement added little to the story apart from confusion. The lawyers needed to make their money which meant that each announcement was tied up in impenetrable legalese.
NSF pounced after a troubled period for Provident, which had seen shares tumble in January after it warned over profits. Provident also 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 139-year-old company sells credit through its Vanquis Bank, Moneybarn and consumer credit business. It is also recovering from a string of regulatory sanctions. The Financial Conduct Authority (FCA) fined credit card lender Vanquis £2m and ordered it to pay £169m in compensation for failing to disclose charges of its popular repayment option plan.
Meanwhile, its Moneybarn car loan arm has been under investigation by the FCA over how it treats borrowers who fall behind with payments.
The company had seen its shares tumble after two profit warnings in 2017, which prompted the resignation of former chief executive Peter Crook. Since then, Provident has sorted itself out with a change in management and a coherent strategy for its future.
Dr Roger Gewolb, chairman of the fair loan comparison website FairMoney.com, said a merger between NSF and Provident would have been catastrophic for British consumers.
He said not only would it have reduced competition in the market, but it is a total waste of potential funding that could have gone straight into investing. The NSF takeover bid was never a good deal for Provident shareholders and I’m mighty relieved that it’s finally over.
Read the full article here: https://www.yorkshirepost.co.uk/business/ros-snowdon-the-takeover-bid-for-bradford-based-provident-financial-that-was-a-mess-from-day-one-1-9892693
