June 4, 2019 / 7:39 PM / 3 months ago

British subprime lender NSF drops bid for rival Provident Financial

(Reuters) - British subprime lender Non-Standard Finance PLC is dropping its hostile 1.3 billion pound ($1.65 billion) bid for rival Provident Financial PLC, NSF said on Tuesday.

After talks with regulatory authorities, NSF’s offer for Provident would lapse as the regulatory condition would not be satisfied by Wednesday midnight, the company said in a statement.

“As of midnight on June 5, the offer will lapse and will not be capable of further acceptance and Provident shareholders who have accepted the offer will cease to be bound by such acceptances,” NSF said.

Provident Financial declined to comment.

Provident said in May its shareholders were not able to assess or even estimate the full economic consequences of the NSF offer and therefore the NSF board should show due consideration to all its shareholders by allowing it to lapse.

UK’s Competition and Markets Authority (CMA) raised questions over the proposed deal in May, saying that it was considering whether a merger of the two would result in a substantial lessening of competition.

NSF had first offered to take over its much larger rival in February, hoping to win the support of Provident’s shareholders who had seen the value of their investments plummet after a run of problems at the doorstep lender that started in 2017.

But Provident’s board and one-fifth of its shareholders rejected the offer that came at no premium to its market price.

The two companies descended into a long-running war of words about the quality of each other’s management.

NSF and Provident operate in the closely scrutinised subprime sector, providing short term loans to low income people who might otherwise struggle to borrow from mainstream banks.

Reporting by Sabahatjahan Contractor in Bengaluru; Editing by Edmund Blair and Grant McCool

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