Provident Financial lashes out at NSF offer

Provident Financial on Tuesday launched a broadside against hostile bidder NSF, attacking its track record and warning that the deal would destroy shareholder value.

NSF already has the backing of 50% of the shareholders for its all-share bid, putting it in a strong position.

But the deal now looks much less certain to go through than it did at first, with the competition watchdogs investigating what effect a merger would have on the market for credit to the poor.

Provident’s chairman Patrick Snowball, in a letter aimed at persuading the 50% of undecided investors to come out against the takeover, said it was “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”.

The deal could cost £40 million in fees to advisers, warned Snowball. NSF has the backing of Invesco and Neil Woodford, who control 54% of the stock. It could in theory push the deal through with just those two, but plainly hopes to win more support.

Snowball said the deal is “poorly thought out” and “fraught with risk”. NSF said in its response to Snowball: “This is more of the same empty rhetoric.”

NSF is also under fire for what it describes as “technical infringements” of the Companies Act over dividend payments since 2015.

Snowball said “the simple fact and truth of the matter is that they were unlawful” and “an indictment of the competency of the NSF team”.

NSF has said it would sell its doorstep lending arm Loans At Home to satisfy the competition watchdogs.

It is unclear yet whether the Competition and Markets Authority will regard that as sufficient.

NSF is led by John Van Kuffeler, the former boss of Provident.