LONDON (Alliance News) - Non-Standard Finance PLC late Monday criticised Provident Financial PLC's board, saying members have limited operational experience and don't understand the issues facing the business, after Provident rejected a GBP1.3 billion bid by the smaller rival door-step lender.
Non-Standard Finance, which on Friday made the hostile all-share takeover offer for Provident Financial, said that Provident Financial's bid rejection statement doesn't state the company's strategy to address what Non-Standard Finance sees as the significant financial, operational and cultural challenges facing the Provident Financial's business.
"The NSF board has set out a clear transformation plan to revitalise Provident's prospects and believes that the transaction would deliver significantly greater benefits for both Provident shareholders and NSF shareholders than either Provident or NSF would otherwise be able to deliver on their own," Non-Standard Finance said.
Non-Standard Finance, in its statement, also pointed out that Provident Financial's decision to postpone its 2018 results announcement by two weeks to March 13 is highly unusual and delays the opportunity for shareholders to judge the company's recent performance.
"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," NSF Founder & Chief Executive John van Kuffeler said.
Provident Financial earlier on Monday said it is "disappointed" at the "unsolicited and highly opportunistic" takeover offer from NSF.
Provident said it considers the "hostile" offer an "irresponsible approach" considering Provident is recovering from a period of "substantial instability".
The company was pushed into a loss in 2017 after it agreed a settlement with the UK Financial Conduct Authority over wrongdoing in its credit card and motor finance businesses.
Provident said Non-Standard Finance's offer could have a "negative and destabilising" impact on its business for a "considerable period of time".
Having considered the offer over the weekend, Provident said the terms "do not reflect" the underlying value of the company and the "upside potential" of its businesses.
"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," said Chief Executive Malcolm Le May.
Provident continues to "strongly" advise shareholders take no action but has acknowledged the "indications provided" in favour of the deal by its largest shareholders, Woodford Investment Management UK, Invesco Ltd, and Marathon Asset Management LLP UK. Combined they hold over 50% of Provident.
Provident also questioned Non-Standard Finance's "track record" and its "ability to execute" the proposed strategy and manage a business the size of Provident. Specifically, Provident points out the "limited" regulatory and operational experience in the Non-Standard Finance executive management team in managing a bank.
Provident believes this is "critical" given Vanquis Bank is Provident's largest asset.
Provident also noted Non-Standard Finance's share price since the company listed in 2015. NSF shares have shed 42% since IPO and have underperformed the FTSE All-Share Index by 48% over the same period - which Provident believes is a "highly relevant factor" considering NSF's all-share offer.
Provident said its current trading continues to be in line with management expectations but will delay the announcement of its full year results to March 13.
Shares in Provident Financial were up 3.9% on Monday afternoon at 612.20 pence each. Non-Standard Finance was trading down 6.0% at 63.07p.
