Provident, the high-interest doorstep lender, has just turned down a takeover bid from its rival, Non-Standard Finance. The deal, which at 511p per share, was worth an estimated £1.3 billion. It has been branded as “irresponsible” and “opportunistic” by Provident bosses.
Provident has been in trouble for some time. And, following its controversial Christmas advert last year, MP’s have accused the firm of reaching a “new low”. The company is accused of targeting vulnerable customers in a way that could lead them to further debt and financial problems.
The lender is known for specialising in lending money to higher-risk consumers, who might find it difficult to borrow from traditional lenders. The company owns various brands, including Moneybarn and Vanquis.
In an interview, Patrick Snowball, chairman of Provident, detailed some of the company’s objections to the deal. These include the disposing of Moneybarn and Satsuma, the strategies set out in the offer, and the low-value of the offer and what it would mean for Provident shareholders.
He said: “The board of Provident Financial believes that the offer does not reflect the underlying value of the company and its prospects. It also has a number of concerns with regard to the offer, including its all-share nature and the executability of the strategy set out in the offer.”
“The board therefore intends to do everything it can to maximise value for all shareholders over the coming weeks and will explore all appropriate alternatives to achieve that objective. It is extremely disappointing that NSF has chosen to announce an unsolicited and highly opportunistic offer for Provident Financial”
“Provident Financial’s management team has stabilised the business in a very turbulent period over the past 18 months, which has largely consisted of addressing managerial mistakes of the past, and now has a clear strategy for delivering enhanced returns to shareholders.”